If you are a business owner who uses a vehicle for work, you may be eligible to claim car-related expenses and reduce your taxable income. Here’s what you need to know to get the most out of this deduction while staying compliant with Canadian tax regulations.

What to Track
To accurately calculate and claim car expenses, you’ll need to keep detailed records of the following:
Business Mileage: Keep a logbook to record each business trip, like driving to a client, a business lunch or to buy business expenses. Make sure to keep track of each trip's date, the purpose and the mileage driven.
Total Mileage: Track your total kilometers driven during the year. The easiest way is to write down your odometer reading every 1st of January.
Fuel Costs: Keep all receipts for gas purchases. Gather them in a small envelope in your car or consider using the app from your favourite gas station to save your gas receipts automatically.
Maintenance and Repairs: Oil changes, tire replacements, and other upkeep.
Interest on Loan Payments: You cannot deduct your car loan payments, but you can deduct the interests you pay.
Insurance
License and Registration Fees
How to Calculate Your Deduction
Determine Your Business-Use Percentage Use your logbook to calculate the percentage of total kilometers driven for business purposes.
Example: If you drove 20,000 km in total and 5,000 km were for business, your business-use percentage is 25%.
Apply the Percentage Multiply the total eligible car-related expenses by your business-use percentage to calculate the deductible amount.
Example:
Total car expenses (fuel, insurance, maintenance, etc.): $10,000
Business-use percentage: 25%
Deductible car expenses: $10,000 × 25% = $2,500
How to Keep Track of Business Mileage
You can use an app - like MileIQ or QBO - that automatically tracks your car trips, based on the GPS-location of your phone. Not so keen on apps or GPS-tracking? Use the good old-fashioned paper-and-pen solution and keep a booklet in your car to manually keep track of every business trip when it occurs.
Pro Tip: Keep Detailed Records
The CRA requires evidence to support your claims, so ensure you maintain gas receipts, mileage logs, maintenance invoices, and any other relevant documentation.
Need Help?
No worries, I’m here to make it easier! Contact me today for a free consultation.