Kilometric Rates – Questions and Answers  
April 1, 2004

Kilometric rates payable for the use of privately owned vehicles driven on authorized government business as per the NJC Travel Directive

In response to recent enquiries relating to reimbursement for the use of personal vehicles on government business travel, the National Joint Council (NJC) prepared the following Questions and Answers document to clarify the basis for establishing and adjusting km rates in the public service (travel directive).

1.  How are the km rates calculated?

The km rates are based on a methodology comprised of fixed components and variable components associated with operating a private vehicle.

2.  What are fixed components?

The fixed component reimburses drivers for each day they use their private vehicle for organizational travel.  Fixed costs include depreciation, taxes, financing, insurance, licensing and registration, and miscellaneous items.

3.  What are variable components?

The variable component reimburses drivers for the operating cost of each kilometre travelled.  Variable costs include fuel, oil, tires and maintenance.

4.  What are the reasons for the changes in the 2004 reimbursement rate?

Some of the major reasons for the changes in the reimbursement rates are increases in insurance premiums and the decline in financing costs resulting from both the lower interest rate environment and the subsidized financing rates offered by the motor companies.

5.  Does the cost of gasoline affect the km rates?

The cost of gasoline is the second largest cost driver in calculating these rates.  On average, it represents approximately 20% of the employer-requested rate in each province and territory. 

6.  Are regional differences taken into account?

Yes, Regional differences are accounted for by evaluating the effect of taxes, registration fees, insurance, maintenance and fuel costs for each province and territory.  In addition, km rates in the Territories are increased due to higher operating costs associated with more severe climactic conditions.

7.  Who calculates these rates?

The NJC commissions PHH Strategic Business Services with calculating km rates using the above-mentioned methodology.

8.  Who reviews the rates?

The NJC Government Travel Committee, a joint Union-Management Committee of the NJC, regularly reviews the rates.

9.  Who approves the km rates?

The NJC Executive Committee approves the kilometric rates.

10.  How often are the km rates reviewed?

The km rates are normally reviewed on a yearly basis effective April 1 of each year.

11.  How can I be sure that the km rates are fair and reasonable?

The methodology used to determine the km rates is standard in the industry.  It is based on a number of factors that attempt to capture the typical standing and operating costs associated with owning and operating a private vehicle in Canada and which ought to be fairly compensated.

Some individuals may choose to drive more expensive vehicles while others may choose to drive less costly ones.  In the same fashion, some individuals may obtain better pricing for their vehicle, for financing, or for insurance than is used in the methodology, while others, for various reasons, may have paid higher rates.  Thus, individual choices or circumstances may result in actual costs either higher or lower than the reimbursement rates.  However, the goal in the methodology is to capture all of the costs for a reasonable ownership scenario.

For more information on the use of privately owned vehicles driven on authorized government business, please consult the NJC Travel Directive, articles 3.1.11 - 3.4.11 on the NJC ( and TBS ( Web sites.