Vehicle expenses are a common deduction for employees.
Some employees receive an allowance for the use of their personal vehicle for business. If this allowance is a flat rate, like $200 a month, then the allowance is taxable. The employee adds the allowance to their income as the allowance will be included on their T4. The employee is allowed to calculate and deduct the business portion of their vehicle expenses on their personal tax return. This deduction is allowed, provided their employer gives them a T2200 form. An employee would only do these calculations if they have business use of their vehicle and have kept their receipts.
If an employee is reimbursed for kilometers they drive for business, this reimbursement is not taxable. You do not include this reimbursement in your income. However, if you decide that the reimbursement is not really covering your costs, you can calculate your actual costs on your return and subtract the reimbursement from those costs. Some people will not be organized enough to save all their vehicle receipts, so they are happy to take the tax-free reimbursement and not do any other calculating.
If your employer is offering you an allowance or a reimbursement, you should understand the difference. An allowance is taxable. A reimbursement is not, provided the rate is within the CRA guidelines.