Kilometric rates payable for the use of privately owned vehicles
driven on authorized government business as per the NJC Travel Directive
In response to an increased number of requests for information from federal public service employees and in a effort to clarify the basis for establishing and adjusting kilometric (km) rates, the National Joint Council (NJC) prepared the following Questions and Answers.
1. How are the km rates calculated?
The km rates are calculated based on a methodology comprised of standing costs associated with owning a private vehicle, and operating costs associated with operating a private vehicle.
2. What are standing costs?
Standing costs are depreciation, provincial tax, finance charges, insurance and registration fees.
3. What are operating costs?
Operating costs are gasoline, oil, lubrication, tires, maintenance and repairs.
4. Are regional differences taken into consideration?
Yes. Regional differences are accounted for by evaluating the affect 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 climatic conditions.
5. Why is the employer-requested km rate higher than the traveler-requested rate?
When the employer requests, and the traveler agrees, to the use of a privately owned vehicle for any authorized government business travel, the traveler is reimbursed at the employer-requested km rate (higher rate) which consists of both the standing and operating costs associated with owning and operating a private vehicle.
On the other hand, when a traveler requests, and the employer agrees, to the use of a privately owned vehicle for any authorized government business travel and despite the existence and adequacy of commercial or government transportation, the traveler is then reimbursed at the traveler-requested km rate (lower rate). This is designed to offset operating costs associated with operating a private vehicle.
6. Who calculates the km rates?
The NJC commissions PHH Business Information Consulting Services with calculating km rates using the above-mentioned methodology.
7. Who reviews the km rates?
The Government Travel Committee, a Joint Union-Management Committee of the NJC, is tasked with regularly reviewing km rates.
8. How often are the km rates reviewed?
The km rates are normally reviewed on a yearly basis. However, since July 2000 and in order to address fluctuations in gasoline prices, the km rates are now reviewed on a quarterly basis to ensure that they are current.
9. How are the km rates reviewed and adjusted?
Each quarter, the NJC Government Travel Committee analyses reports provided by PHH Information and Consulting Services on the average cost of gasoline in each province and territory. If the cost of gasoline is found to have increased or decreased, the Committee recommends adjustments to the km rates for the following quarter. If no significant change in the average cost of gasoline is found, the Committee recommends that the km rates remain the same.
10. How does the cost of gasoline affect the km rates?
The cost of gasoline is an important factor in calculating the km rates. On average, the cost of gasoline represents approximately 20% of the employer-requested rate in each province and territory.
11. Who approves the km rates?
The km rates are approved by the NJC Executive Committee.
12. 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 2.10 to 2.14, on TBS web site at www.publiservice.tbs-sct.gc.ca/travel/travel_e.html.