Employees may receive tax free reimbursements of automotive expenses they incur in using their vehicles for business purposes. If the reimbursement is based on the prescribed rates of 50 cents for kilometers up to 5,000 per year and 44 cents for anything over 5,000, the reimbursement is not only tax free to the employee, but is also fully deductible to the employer. In other words, this is the best of both worlds. Note that the reimbursement rates noted above are the 2006 rates, and rates usually change each year.

It is very important for employees to maintain an auto log to support any claims paid under this beneficial tax rule.

Please contact your accountant at Harvey, Lister & Webb Incorporated to discuss the possibilities.

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