Recording Vehicle Expenses for Business and Personal Use in Canada
If you use your vehicle for both business and personal purposes, understanding how to properly track and claim vehicle expenses can help you maximize your tax deductions while remaining compliant with Canada Revenue Agency (CRA) requirements.
Why Vehicle Expense Tracking Matters
Many business owners, self-employed professionals, and contractors use their vehicles for a mix of business and personal activities. The CRA allows you to deduct only the portion of expenses related to business use. Proper record-keeping ensures that you claim the correct amount and have the documentation needed in case of a review.
What Vehicle Expenses Can You Claim?
Keep records and receipts for the following vehicle-related expenses:
• Fuel and charging costs
• Insurance premiums
• Repairs and maintenance
• Vehicle registration and licensing fees
• Loan interest (subject to CRA limits)
• Lease payments (subject to CRA limits)
You should also track:
• Total kilometres driven during the year
• Business kilometres driven during the year
How to Calculate Your Business-Use Percentage
The CRA requires you to determine the percentage of vehicle use that relates to your business.
Formula:
Business Kilometres ÷ Total Kilometres = Business-Use Percentage
Example
• Total kilometres driven: 25,000 km
• Business kilometres driven: 10,000 km
Calculation:
10,000 ÷ 25,000 = 40%
Your business-use percentage is 40%.
Calculating Your Claimable Vehicle Expenses
Let’s assume your total annual vehicle expenses are $7,200.
Using the business-use percentage calculated above:
$7,200 × 40% = $2,880
In this example, you can claim $2,880 as a business expense.
Maintain Proper Records
To support your claim, the CRA expects you to keep:
• A mileage log showing business trips
• Fuel and maintenance receipts
• Insurance records
• Registration documents
• Loan or lease payment records
Good record-keeping not only helps maximize your deductions but also protects you during a CRA review or audit.
Final Thoughts
Vehicle expenses can represent a significant tax deduction for business owners and self-employed individuals. By maintaining accurate mileage records and keeping all supporting receipts, you can confidently claim the business portion of your vehicle costs and remain CRA compliant.
Need help tracking vehicle expenses, organizing your records, or preparing your tax returns?
Arizen Tax and Business Inc.
📞 780-686-2560
📧 info@arizentax.com
🌐 www.arizentax.com
We’re here to help you stay compliant, maximize deductions, and focus on growing your business.