Question 1

What is the CRA mileage rate 2026?

Accepted Answer

73¢ per kilometre for the first 5,000 business kilometres and 67¢ after that, effective January 1, 2026. Ontario employers use the province rate.

Question 2

What is the IRS mileage rate 2026?

Accepted Answer

72.5¢ per mile for business use, effective January 1, 2026. It is designed to cover fuel, depreciation, insurance and maintenance.

Question 3

How large are OSHA fines and CRA penalties?

Accepted Answer

OSHA fines reach up to $165,514 per willful or repeat violation. CRA penalties on unverified mileage allowances are modeled at $50K–$250K per audit. Both are per-incident, not annual.

Question 4

How does this audit estimate uninsured drivers?

Accepted Answer

It applies a documented rate of roughly one in three to drivers using their own personal vehicles for work only — company vehicles are insured by the business, so they're excluded. One in three is the high end of a real range, shown as an estimate.

Question 5

What are the penalties if an employer can't prove business mileage in the US or Canada?

Accepted Answer

Without a verified per-trip log, the IRS or CRA can treat a mileage allowance as taxable income and add penalties plus interest — modeled at $50K–$250K per audit for an unverified program. OSHA fines reach up to $165,514 per willful or repeat violation and Ontario OHSA corporate fines reach $2M, plus possible criminal exposure for negligence if an uninsured employee crashes on a work trip. A GPS- and odometer-verified log is what makes the program defensible.

Question 6

What happens if an employee is uninsured while driving their own vehicle for work?

Accepted Answer

If an uninsured driver crashes on a work trip, their personal insurer can deny the claim because the policy excludes business use — that insurance denial, and the cost behind it, then looks to the employer, alongside OSHA fines, CRA penalties and potential criminal exposure for negligence. Roughly one in three employees driving their own vehicle for work is uninsured for business use.

Question 7

Is mileage reimbursement taxable?

Accepted Answer

Mileage reimbursed at or below the CRA or IRS standard rate (CRA 73¢/km for the first 5,000 km; IRS 72.5¢/mile in 2026) is generally tax-free to the employee and deductible to the employer. Reimbursement above the standard rate, or a flat allowance paid without a mileage record, can become taxable income.

Question 8

What are the CRA mileage reimbursement rules for employers?

Accepted Answer

To keep an allowance tax-free, CRA expects it to be based on actual business kilometres at a reasonable per-kilometre rate (the 2026 rate is 73¢/km for the first 5,000 km and 67¢/km after) and supported by a contemporaneous log. Flat monthly car allowances and unsupported estimates can be reassessed as taxable income with penalties.

Question 9

Are employers liable when employees drive their own vehicles for work?

Accepted Answer

Yes. Under vicarious liability and provincial OHS duties — for example Ontario's OHSA — an employer can be held responsible when an employee causes a crash while driving their personal vehicle on company business, even though the company doesn't own the car. If the employee's personal policy denies the business-use claim, the cost lands on the employer.

EMPLOYEE MILEAGE REIMBURSEMENT & EMPLOYER LIABILITY AUDIT (CANADA & US)

Frequently asked questions