Reimbursement for Business Use of Personal Vehicles
Study prepared for The Treasury Board of Canada Secretariat
By Corporate Fleet Services
1. Fuel Price Update Synopsis
Corporate Fleet Services (CFS) has been mandated by the Treasury Board of Canada Secretariat to perform the annual evaluation of per-kilometre Reimbursement Rates for government employees who are required to use their personal vehicles while performing government business. Furthermore, the periodic impact of varying fuel prices is to be evaluated quarterly by producing three additional Fuel Price Updates per year. The present document represents the Update for August 2025 (for publication on October 1st, 2025).
The latest annual study established Reimbursement Rates for each Canadian Province and Territory after performing a comprehensive analysis of all vehicle operating expenses. These rates were presented in the Reimbursement for Business Use of Personal Vehicles Report, dated November 2024 (for publication on January 1st, 2025). Two subsequent Fuel Updates were produced for February 2025 (for publication on April 1st, 2025) and May 2025 (for publication on July 1st, 2025).
The present Update reflects the impact of current fuel prices on the Travel and Commuting Rates’ recommendations made in the Annual Report with a focus on average pump prices of gasoline by Province and Territory. The prices were averaged for each Province or Territory for the three months prior to the release of the current Update (June, July and August 2025). All prices are given in dollars per litre.
This Update also presents the latest recommended rates of reimbursement for consideration by the Treasury Board Secretariat in dollars per kilometre. The recommendations for Reimbursement Rates are given for:
- Travel Rates (travellers authorized and reimbursed to use their personal vehicles on government business travel), also referred to as “Kilometric Rates” in the National Joint Council Travel Directive (Appendix B), and
- Commuting Rates (employees reimbursed their variable expenses to use their personal vehicles to commute to their designated remote worksites), also referred to as “Lower Kilometric Rates” in the National Joint Council Commuting Assistance Directive (Appendix A).
Federal and Provincial sales taxes were also researched to determine if there were any recent changes that could have had an immediate impact on the total costs of vehicle ownership and operation.
For the period June-August 2025, fuel expenses represent 18.7% of the total cost of vehicle operation (reflected in the Travel Rates) or a Canadian weighted average of 11.2 cents per kilometre. The present Update identified small variations in average gasoline prices across Canada, which generally had a minimal downward impact on Reimbursement Rates of a maximum 1.5 cents. As a result, the Reimbursement Rates for the ten Provinces either stayed constant or decreased by a maximum of 1.0 cent relative to the previous Fuel Update (May 2025, for publication on July 1st, 2025). For the Territories, the rates decreased between 1.0 cent and 1.5 cents (see Section 2.2 - Gasoline prices across Canada for details).
2. Fuel Prices
2.1 Energy Market Context
Over the past three months, global crude oil markets have seen downward pressures coming from rising supply, particularly by the OPEC+ coalition unwinding its voluntary production cuts at an accelerated pace, as well as demand that is threatened by the continued trade tensions and increased tariff policies, which are becoming a permanent feature of the current economic environment.
After the tariff shock of April 2025, crude prices were recovering in May and June, mainly due to rising geopolitical tensions and concerns over potential supply disruptions from Iran. This resulted in increased oil prices in mid-June. The ceasefire agreement between Iran and Israel led to a sudden plunge in crude prices – about a 13% drop in a two-workday period, which marked the largest two-day decline since 2022. The West Texas Intermediate (WTI) price dropped from a three-month high of $75 USD per barrel on June 20th to about $64.5 USD per barrel by June 24th. Similarly, the Brent slid from $77 USD per barrel to $67 USD per barrel in the same time period. Following the decline, crude prices fluctuated around the same price levels in July and August, and as of August 8th, the WTI stood at $63.88 USD per barrel, and the Brent was at $66.59 USD per barrel.
Average gasoline prices in Canada followed crude oil trends, increasing in May and June, then dropping suddenly in late June and fluctuating since then. However, the price fluctuations were less pronounced. The Canadian average price for gasoline declined from a three-month high of $1.500 per litre on June 23rd to $1.415 by June 26th, a decline of 5.7%. On average, the price for gasoline in Canada over the past three months was $1.440 per litre as compared to $1.504 per litre in the previous three-month period, a moderate 4.3% decline. In a yearly perspective, the three-month average price in Canada was 14.0% lower as compared to the same three-month period last year, when it averaged $1.675.
The United States (U.S.) has continued the implementation of a sweeping overhaul of its tariff policies. It has been noted that the current average level of the U.S. tariff rate hasn’t been seen since 1933. The situation remains fluid as some agreements have been reached, while many others are still being negotiated. In July, an agreement was reached between the U.S. and the European Union at a 15% tariff rate. At the same time, the negotiations with China are continuing, and an increase in tariff rates has been paused until November 10th, 2025, thus reducing some of the tension between the two countries. Since August 1st, 2025, Canada has faced a 35% tariff on goods that are not part of the Canada-United States-Mexico Agreement (CUSMA). While the majority of the goods fall under the CUSMA rules, the tariff rate applies to a significant portion of exports – estimates vary anywhere from 5% to 20%, depending on available sources. Notably, the tariff rate on steel and aluminum was doubled and currently rests at 50%.
2.1.1 Global Crude Oil Demand
The International Monetary Fund’s (IMF) latest Update to the World Economic Outlook (WEO) from July 2025 indicates a stronger economic activity ahead of the U.S. tariffs (so-called “frontloading”), which has resulted in a slightly improved outlook for this year as well as the following one. In addition, other factors, including lower average tariff rates than previously announced, as well as an improvement in certain financial conditions, have contributed to the cautious improvement of the economic prospects. As the IMF notes, “(..) the global economy has continued to hold steady, but the composition of activity points to distortions from tariffs, rather than underlying robustness.”
As a result, the projected growth rates have been adjusted upward compared to the previous WEO report from April 2025. Global growth is now projected at 3.0% for 2025 (an improvement of 0.2 percentage points) and 3.1% in 2026 (up by 0.1 percentage point). The global growth in the first quarter of 2025 was 0.3 percentage points above that predicted in the April WEO, driven by international trade and investment activity, while private consumption was more subdued across major economies. While the outlook projects that the global inflation remains on a path to reach 4.2% in 2025 and 3.6% in 2026, inflation is expected to remain above target for the U.S. (mainly driven by the cost of tariffs on the U.S economy), while declining in other large economies. Risks to the outlook remain tilted to the downside. Significant uncertainty remains around the tariff policies as some of the temporary agreements expire, while more permanent agreements have not been reached. The uncertainty could lead to sluggish economic activity. As geopolitical tensions continue to cast shadows on the global supply chains, any disruptions could easily push commodity prices upwards.
The overall projected growth rate for Advanced Economies is at 1.5% for 2025 and 1.6% for 2026, with many countries seeing an improved outlook. The U.S. economy is projected to expand by 1.9% in 2025, a 0.1 percentage point increase over the April WEO report. The growth rate projection is increasing to 2.0% in 2026, representing a 0.3 percentage point increase above the previous forecast, largely thanks to the corporate investment provisions in the new U.S. Government Spending Bill. The shock in the U.S. equity markets that led to significant losses in early April has been overcome, and the markets have reached new heights. Similarly, the Euro Area economy has also seen an upward adjustment of 0.2 percentage points, and the growth for 2025 is projected at 1.0%. Notably, half of this increase has come from Ireland, a country that only represents 5% of the Euro Area economy. The country saw a significant increase in pharmaceutical exports to the U.S. in advance of the announced tariffs, and this factor pushed the overall economic activity indicators up. The 2026 outlook for the Euro Area remains unchanged at 1.2%.
The Bank of Canada, in its Monetary Policy Report (MPR) from July 2025, estimates that the Canadian economy had a strong growth in the first quarter of 2025 at 2.2%, but subsequently contracted by 1.5% and is projected to grow by 1.0% in the second half of the year. Similar to other economies, the strong beginning of the year was, in a large part, due to a temporary surge in exports in anticipation of U.S. tariffs, followed by a significant decline in exports and business investments in the second quarter of the year. In a yearly perspective, the Bank of Canada outlook for the economy is at 1.3% this year and 1.1% in 2026. By comparison, the IMF outlook for Canada has seen a minor upward adjustment of 0.1 percentage points for 2025 and is now at 1.2% and remains unchanged for 2026 at 1.4%.
The forecast for Emerging Markets and Developing Economies is at 4.1% in 2025 and 4.0% in 2026. The 0.4 percentage point increase this year is largely driven by China, which has seen a significant upward revision of 0.8 percentage points to 4.8% as compared to the IMF WEO from April. This reflects a strong economic activity as well as a de-escalation of the trade-related tensions and a reduction of the U.S.-China tariffs. Although China’s exports to the U.S. have declined by more than 25% as compared to the fall of 2024, that decline has been more than offset by increased sales to the rest of the world, providing a significant boost to the outlook.
As has become customary, the outlook for the demand for crude oil remains varied, with OPEC having the most optimistic view, followed by the U.S. Energy Information Administration (EIA). The International Energy Agency (IEA) remains the most conservative in its forecasts. According to the Monthly Oil Market Report (MOMR) from August 2025, OPEC projects an increase in demand of 1.3 million barrels per day (mb/d) in 2025, averaging 105.1 mb/d (an upward adjustment of 0.1 mb/d compared to the report three months ago) before rising further to 106.5 mb/d in 2026. The U.S. EIA estimates that global consumption averaged 102.7 mb/d (unchanged) in 2024 and is expected to average 103.7 mb/d this year (unchanged) and increase to 104.9 mb/d in 2026 (an upward adjustment of 0.3 mb/d). The IEA forecast stands at 103.7 mb/d this year and 104.4 mb/d for 2026.
2.1.2 Global Crude Oil Supply
The global oil supply projections have increased significantly. OPEC+ has ramped up production more quickly than previously anticipated, and other countries have also increased output. As a result, global markets are showing signs of oversupply, with a significant build-up in crude oil inventories beginning to take shape. The U.S. Energy Information Administration (EIA) projects the supply to rise from 103.1 million barrels per day (mb/d) last year to 105.4 mb/d this year, an upward revision of 1.3 mb/d as compared to three months ago. The U.S. EIA forecasts a further increase to 106.4 mb/d in 2026, which is 1.0 mb/d higher than the previous estimate. These projections suggest a global oversupply of 1.7 mb/d this year and 1.5 mb/d in 2026. The latest International Energy Agency (IEA) supply estimates show similar trends, with production expected to exceed demand by nearly 3 mb/d in 2026. The IEA anticipates that the global supply will grow by 2.5 mb/d this year, with 1.3 mb/d coming from the OPEC+ coalition.
In April 2025, the OPEC+ coalition began unwinding its voluntary production cuts of 2.2 mb/d, which had been in effect since November 2023. Although the initial target to eliminate the voluntary cuts was September 2026, the coalition significantly accelerated the pace. With a final output increase of 547,000 barrels per day (b/d) in September 2025, the unwinding of the production cuts will be complete. Notably, core quota-based cuts of 3.66 mb/d remain in place. The next OPEC+ meeting in September 2025 is expected to address potential quota reductions to further boost production.
Supply increases from the U.S., Canada, Brazil, Norway, and Guyana continue to contribute to rising global output. According to the U.S. EIA’s Short-Term Energy Outlook (STEO) published in August 2025, U.S. production is expected to grow by 0.2 mb/d this year, averaging 13.4 mb/d. However, a slowdown is anticipated for next year, with projections standing at 13.3 mb/d production due to reduced capital expenditures and intensified by rising costs (tariffs on steel), as well as downward oil price pressures. The U.S. EIA forecasts that the U.S. crude production will peak at 13.6 mb/d in December 2025 and will decline to 13.1 mb/d by the fourth quarter of 2026.
Canada’s energy sector remains resilient. Despite lower prices, oil production is increasing as companies invest in optimization and efficiency. Oil sands output is projected to rise by 5% in 2025, averaging 3.5 mb/d, according to S&P Global projections. The latest data from the Canada Energy Regulator shows that the country exports over 80% of the crude oil it produces, with the vast majority (about 97%) going to the U.S. Canada is the largest supplier of crude oil to the U.S., accounting for 60% of total U.S. crude imports. Amid mounting trade tensions, China has emerged as an increasingly important customer for Canadian oil. Since the full opening of the Trans Mountain Pipeline in June 2025, 54.5% of the oil transported through it has been shipped to China.
Crude oil inventories are rising and are expected to grow further as OPEC+ releases more oil into the market. According to the IEA, the global observed oil inventories rose for the fifth consecutive month in June, increasing by 28.1 million barrels month-over-month – nearly 0.9 mb/d – to reach a 46-month high of 7.836 billion barrels total. Rising inventories increase storage costs, thus incentivizing lower selling prices, which have already led to price declines in recent months. Similarly, the U.S. EIA data shows inventories building at 1.4 mb/d in the first half of this year, with expectations of 1.9 mb/d in the second half of the year and up to 2.3 mb/d in the first quarter of 2026. Such rapid inventory accumulation is likely to exert further downward pressure on global oil prices.
2.2 Gasoline Prices Across Canada
Gasoline prices across Canada declined during the June-August 2025 period, compared to the previous three months. This was largely due to adjustments following the elimination of consumer carbon pricing by the Canadian Federal Government on April 1st, 2025 and, to a lesser extent, the global oil price trends. As noted in the previous Fuel Update (May 2025 for publication on July 1st, 2025), carbon pricing accounted for approximately 17.6 cents per litre last year. Due to the methodology used to calculate average gasoline prices, observable adjustments occurred when comparing the June-August period to March-May 2025. While prices fluctuated with global crude trends, the average level remained relatively stable. This is evident in Quebec, where the province’s cap-and-trade carbon pricing system was unaffected by the April change, resulting in stable gasoline prices.
As a result, the national average gasoline price declined from $1.504 to $1.440 per litre, a 4.3% decrease. The price changes in Provinces and Territories ranged from a 4.3% decline in Nova Scotia to a 7.5% decline in Saskatchewan. Quebec was the exception, with only a 0.6% decrease in the average price at the pump.
Prices of gasoline, in Canada, include all applicable taxes. Prices vary significantly across Canada, mainly due to the difference in the types and amounts of taxes being charged on fuel in different Provinces and Territories. The present Update calculated the average prices of regular gasoline charged at the pump. The fuel price data was primarily obtained from Natural Resources Canada via Kalibrate (previously Kent Marketing), based on daily published fuel prices for 78 locations across Canada. This data was verified against additional databases that similarly track fuel prices all across Canada.
Consistent with the methodology of the Annual Report, when determining average gasoline prices per Province or Territory, we have used weighted averages according to population in order to better conform to reality. In this manner, metropolitan population centers account for a greater portion of the total average price compared to smaller towns.
The following is a table with average regular gasoline prices for all Canadian Provinces and Territories, in dollars per litre, for the period June - August 2025:
|
Province/Territory |
Current fuel price |
July 1st, 2025, Fuel Update Report fuel price |
Price difference |
|---|---|---|---|
|
Alberta |
$1.300 |
$1.371 |
-$0.071 |
|
British Columbia |
$1.637 |
$1.716 |
-$0.079 |
|
Manitoba |
$1.334 |
$1.416 |
-$0.082 |
|
New Brunswick |
$1.416 |
$1.483 |
-$0.067 |
|
Newfoundland and Labrador |
$1.511 |
$1.591 |
-$0.080 |
|
Northwest Territories |
$1.435 |
$1.533 |
-$0.098 |
|
Nova Scotia |
$1.431 |
$1.496 |
-$0.065 |
|
Nunavut |
$1.578 |
$1.664 |
-$0.086 |
|
Ontario |
$1.350 |
$1.425 |
-$0.075 |
|
Prince Edward Island |
$1.487 |
$1.556 |
-$0.069 |
|
Quebec |
$1.556 |
$1.566 |
-$0.010 |
|
Saskatchewan |
$1.339 |
$1.447 |
-$0.108 |
|
Yukon |
$1.619 |
$1.718 |
-$0.099 |
Fuel price data was extracted for a period of three months (May 20th to August 8th, 2025) in order to reflect current gasoline price trends. Subsequent reports will focus on three-month periods following the period covered in the present study. Average gasoline prices per litre and per Province or Territory were found to vary between $1.300 in Alberta to $1.637 in British Columbia, with a Canadian average of $1.440, a decrease of 6.4 cents from the previous Fuel Update (May 2025, for publication on July 1st, 2025).
Recent changes worth mentioning are the 1% reduction in the HST in Nova Scotia, which took effect on April 1st, as well as an adjustment in the government-set gasoline prices in Nunavut, also effective April 1st, 2025. Both changes were already incorporated in the previous Fuel Update (May 2025, for publication on July 1st, 2025).
For illustration purposes, Graph 1 displays gasoline prices for the main metropolitan areas for a one-year period (August 2024 - August 2025).
Also for illustration purposes, Graph 2 displays crude oil prices for three benchmarks – WTI (West Texas Intermediate), Brent and WCS (Western Canadian Select) for a one-year period (August 2024 - August 2025).
2.3 Sales Taxes
For the current Update, research was performed to see if there were any relevant changes to Federal and Provincial sales taxes that could have an immediate impact on the Reimbursement Rates. As of the date of this Update, outside of the 1% reduction in the HST in Nova Scotia, which took effect on April 1st, which was already accounted for in the previous Fuel Update (May 2025, for publication on July 1st, 2025), no changes were observed in sales taxes anywhere in Canada as compared to the previous Fuel Update. Moreover, no changes are foreseen at this time for the immediate future.
3. Impact of Fuel Prices on Reimbursement Rates
3.1 Fuel Consumption
In calculating the fuel costs contribution to the total vehicle operating costs, the methodology employed in the Annual Report was strictly adhered to. Fuel consumption for every vehicle model in the study was thus combined with average prices per Province or Territory to determine the fuel portion of operating costs, based on an average of 20,000 kilometres per year.
3.2 Updated Reimbursement Rates
For comparison, the following table provides updated Travel (Kilometric) and Commuting (Lower Kilometric) Rates, as well as rates previously calculated for the Annual Report (November 2024, for publication on January 1st, 2025), the February 2025 Fuel Update (for publication on April 1st, 2025) and the May 2025 Fuel Update (for publication on July 1st, 2025):
Current Reimbursement Schedule (in dollars per kilometre)
Travel Rate (Kilometric Rate)
|
Province/Territory |
Current Fuel Update |
July 1st 2025, |
April 1st, 2025, |
January 1st, 2025, |
|---|---|---|---|---|
|
Alberta |
$0.565 |
$0.570 |
$0.575 |
$0.575 |
|
British Columbia |
$0.595 |
$0.600 |
$0.605 |
$0.600 |
|
Manitoba |
$0.560 |
$0.565 |
$0.560 |
$0.560 |
|
New Brunswick |
$0.595 |
$0.600 |
$0.610 |
$0.605 |
|
Newfoundland and Labrador |
$0.615 |
$0.620 |
$0.630 |
$0.630 |
|
Northwest Territories |
$0.700 |
$0.710 |
$0.720 |
$0.720 |
|
Nova Scotia |
$0.595 |
$0.600 |
$0.615 |
$0.615 |
|
Nunavut |
$0.705 |
$0.715 |
$0.725 |
$0.725 |
|
Ontario |
$0.620 |
$0.625 |
$0.635 |
$0.630 |
|
Prince Edward Island |
$0.585 |
$0.590 |
$0.600 |
$0.600 |
|
Quebec |
$0.605 |
$0.605 |
$0.610 |
$0.605 |
|
Saskatchewan |
$0.555 |
$0.560 |
$0.565 |
$0.565 |
|
Yukon |
$0.705 |
$0.715 |
$0.730 |
$0.730 |
Commuting Rate (Lower Kilometric Rate)
|
Province/Territory |
Current Fuel Update |
July 1st, 2025, |
April 1st, 2025, |
January 1st, 2025, |
|---|---|---|---|---|
|
Alberta |
$0.210 |
$0.220 |
$0.225 |
$0.225 |
|
British Columbia |
$0.255 |
$0.260 |
$0.265 |
$0.260 |
|
Manitoba |
$0.220 |
$0.230 |
$0.225 |
$0.220 |
|
New Brunswick |
$0.230 |
$0.235 |
$0.245 |
$0.245 |
|
Newfoundland and Labrador |
$0.240 |
$0.245 |
$0.250 |
$0.250 |
|
Northwest Territories |
$0.300 |
$0.315 |
$0.325 |
$0.325 |
|
Nova Scotia |
$0.230 |
$0.235 |
$0.245 |
$0.245 |
|
Nunavut |
$0.320 |
$0.330 |
$0.340 |
$0.335 |
|
Ontario |
$0.225 |
$0.230 |
$0.240 |
$0.240 |
|
Prince Edward Island |
$0.235 |
$0.245 |
$0.250 |
$0.250 |
|
Quebec |
$0.250 |
$0.250 |
$0.255 |
$0.255 |
|
Saskatchewan |
$0.220 |
$0.230 |
$0.235 |
$0.235 |
|
Yukon |
$0.325 |
$0.335 |
$0.345 |
$0.350 |
Note: All figures were rounded up to the nearest half-cent.
The impact of gasoline prices on the Reimbursement Rates was minimal for the present Fuel Update. In comparison to the last Fuel Update (May 2025, for publication on July 1st, 2025), the Travel (Kilometric) and Commuting (Lower Kilometric) Rates have either stayed constant or decreased by a maximum of 1.0 cent per kilometre for the Provinces. For the Territories, the Reimbursement Rates decreased by 1.0 cent, with the exception of the Northwest Territories, where the Commuting (Lower Kilometric) Rate decreased by 1.5 cents.
Overall, Canadian weighted averages decreased by 0.5 cents per kilometre for both the Travel and Commuting Rates, compared to the last Fuel Update (May 2025, for publication on July 1st, 2025). They are now at 60.0 cents per kilometre and 23.5 cents per kilometre, respectively.
Fuel contributes on average 11.2 cents per kilometre to total operating costs, ranging from 10.1 cents in Alberta to 18.3 cents in the Yukon. Given the complexity of socio-economic factors affecting the global energy market, it is difficult to make any prediction regarding gasoline prices for the next three-month period. However, any future changes will be reflected in the subsequent Annual Report.