# Form T2200 and T777: deducting vehicle expenses in Canada

> When your employer reimburses below the CRA rate, you can deduct the gap with T2200 + T777. Here's how.

**Author:** Emily Thompson — Canadian Tax Specialist (CRA)  
**Published:** 2026-04-12  
**Updated:** 2026-04-28  
**URL:** https://quilometragem.com/blog/form-t2200-and-t777-deducting-vehicle-expenses-in-canada

**TL;DR:** When your employer reimburses below the CRA rate, you can deduct the gap with T2200 + T777.

- To do this, you also need a signed Form T2200 (Declaration of Conditions of Employment) from your employer confirming you were required to use your own vehicle for work and weren't fully reimbursed.
- Get it signed at year-end (December or January).
- Vehicles fall into Class 10 or Class 10.1 depending on cost.
- CRA accepts a representative 3-month sample logbook after a 12-month base year, provided the pattern is consistent (within 10%).
- Alex drives 18,000 km in 2026; 12,000 are work-related (67% business use).

## When you can claim

If you're a Canadian employee who uses a personal vehicle for work AND your employer either:

- Reimburses you below the CRA reasonable rate (72¢/66¢), or
- Pays you no allowance at all (or only a flat allowance that ends up taxable),

you can deduct your vehicle expenses on Form T777 (Statement of Employment Expenses) attached to your T1 personal return.[^cra-t2200-85] To do this, you also need a signed Form T2200 (Declaration of Conditions of Employment) from your employer confirming you were required to use your own vehicle for work and weren't fully reimbursed.

## Form T2200: what it certifies

T2200 is signed by your employer and confirms:

- You were required to work away from the employer's place of business.
- You were required to use a personal vehicle for the work.
- You were not fully reimbursed (or were paid a non-reasonable allowance).
- The portion of expenses you paid (for fuel, repairs, insurance, lease/CCA).

No T2200 = no T777 deduction. Get it signed at year-end (December or January).

## What you can deduct on T777

Prorated by business-use km / total km:

- Fuel and oil
- Maintenance and repairs
- Insurance
- Licence and registration fees
- Capital cost allowance (CCA), or lease costs
- Interest on a vehicle loan (capped at $300/month for 2026)

If your employer pays a partial allowance, you reduce the deductible expenses by that amount (or include the allowance in income and deduct expenses fully — whichever is more beneficial).

## Capital Cost Allowance (CCA) for vehicles

Vehicles fall into Class 10 or Class 10.1 depending on cost. For 2026, the cost ceiling for Class 10.1 (passenger vehicles) is $38,000 plus PST/GST. Anything above that ceiling is non-deductible. Class 10.1 has a maximum annual CCA of 30% on the declining balance, with the half-year rule in the year of acquisition.

Electric vehicles benefit from accelerated CCA (Class 54/55) — up to 100% in the first year for eligible zero-emission vehicles, subject to the same cost ceiling.

## The logbook

CRA accepts a representative 3-month sample logbook after a 12-month base year, provided the pattern is consistent (within 10%). New drivers should keep a full-year logbook for the first year. Required fields:

- Date
- Destination
- Purpose of trip
- Kilometres

Quilometragem's digital receipts include all four plus an integrity hash, satisfying CRA's contemporaneous-log standard.

## Worked example

Alex drives 18,000 km in 2026; 12,000 are work-related (67% business use). Employer pays no allowance.

- Fuel: $3,200 × 67% = $2,144.
- Insurance: $1,800 × 67% = $1,206.
- Maintenance: $850 × 67% = $570.
- Licence + registration: $130 × 67% = $87.
- Lease cost (capped): $700/month × 12 × 67% = $5,628.
- Total deduction: $9,635.

Alex attaches T777 + T2200 to the T1 return. At a marginal rate of 30%, the deduction reduces tax payable by approximately $2,890.

## Quebec specifics

Quebec residents file an additional TP-64.3-V form to Revenu Québec (the equivalent of T2200) and use TP-59-V (Quebec equivalent of T777). Per-km figures and CCA limits align with the federal rules.

## Bottom line

If you drive substantially for work and your employer doesn't fully reimburse you at the CRA reasonable rate, T2200 + T777 (and TP-64.3-V + TP-59-V in Quebec) can recover thousands per year. The key is the signed T2200 from the employer and a defensible logbook.

## Sources

- [CRA — Form T2200 Declaration of Conditions of Employment](https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2200.html) — Canada Revenue Agency (2026-04-28)