Most folks still use the word “mileage” even though we’ve been metric for a long time. The correct word seems to be “kilometrage.”
When calculating what to charge for kilometrage, the operating expense portion is easy to figure out. Add up all your operating expenses for a year, (e.g. gas, repairs, maintenance, etc.), and then divide by the total number of kilometres driven that year. If you had $10,000 in operating expenses and drove 20,000 km, then it cost 50¢/km to drive the vehicle that year.
But what about the ownership expense portion (i.e. cost of vehicle, insurance, licences)? If your car cost $35,000, how do you factor that expense into your kilometric rate? Vehicle depreciation depends on what car you own and how long you keep it.
Possible ways to help determine a suitable kilometric rate:
• The federal government publishes a list of kilometric rates for government employees. These generic, one-size-fits-all numbers are the bottom end of what you should charge.
• The government also publishes “acceptable” auto allowance rates for company employees. These more realistic numbers are higher than for government employees. You can charge even higher if your situation requires it.
• The CAA has a somewhat limited driving cost calculator. If you can’t find your vehicle when using “By Brand” then try the generalized “By Category.”
Remember that your mileage rate, (it’s easier to say than kilometrage :-), covers only your vehicle expenses. It does not cover your time. If driving to/from a job takes hours, you should be compensated for that, too. Your time is worth a lot more than, say, 75¢ per kilometre. Your travel fee should include compensation for both vehicle expense and your time.
Also remember that you can claim only the business portion of your vehicle expenses on your tax return. You need to record the kilometres you drive for business purposes each year. For example, if you drove a total of 18,000 km in a given year and that included 9,000 km for business purposes, then you can claim 50% of your vehicle expenses.
My understanding is that booking a per mile charge is strictly for employees. As sole proprietors for the most part, we have to keep track of personal use vs. business use and pro rate all vehicle expenses for the year. eg cca, gas, oil, repairs, maintenance etc.
Andy,
We’re talking about two different things. But the calculations behind the two are similar.
What you mentioned, (keeping track of personal use vs. business use and pro-rating the cost), refers to vehicle expense deductions for income tax purposes. You can use your income tax vehicle expense to help determine a mileage rate to charge customers. Note that some photographers charge a travel rate based on time not kilometres.
What I posted above is about charging customers a suitable mileage rate to help you cover the cost of your vehicle. You can charge this amount either directly as an expense item or you can build it into the overall price. But either way, you have to charge it because it’s a real cost that you and your business have to pay. Some photographers don’t charge a mileage fee or a travel fee because they don’t think it’s a big deal or they think they can’t do it. But again, it’s a real business expense that has to be covered.