Vehicle Expenses: How to Calculate and Support Business Use

“Mostly for work” is not a calculation. For a self-employed person using a vehicle personally and in business, the key evidence is the relationship between business kilometres and total kilometres. Expense receipts explain the cost; a trip record explains the business share.

This guide concerns eligible actual vehicle expenses for a self-employed business. Employee allowances, corporate reimbursements, and employer-provided vehicles raise different questions. Do not import an employee kilometre-rate policy into a sole proprietor's expense claim without checking the applicable rules.

Decide what the trip was for

Record the business purpose, not merely the fact that a laptop or tools were in the vehicle. Travel between business locations or to a customer may be business travel depending on the facts. Commuting between home and a regular workplace is generally personal; working from home sometimes does not automatically make every departure deductible.

If a trip combines work and personal plans, explain how you split the distance. A customer visit followed by a personal weekend trip is not all business travel just because the first stop was for work. Record the route, purpose and personal part instead of guessing a percentage later.

Keep a complete distance record

For each business trip, record the date, destination, business purpose, and kilometres. Record the odometer at the start and end of the year, and preserve acquisition or disposal readings when a vehicle changes during the period. Track each vehicle separately.

• Identify the vehicle and the period covered.
• Keep the trip record close to the time of travel.
• Use calendar or appointment evidence to support, not replace, the mileage details.
• Reconcile business kilometres against total distance and investigate impossible totals.
• Keep corrections traceable rather than overwriting uncertainty with a rounded estimate.

A fictional entry might read: “May 12, 2026; supplier workshop; collect customer-order components; 64 km round trip.” That explains more than “Tuesday: work.” The destination and purpose should be specific enough for later review without unnecessarily exposing customer information in widely shared files.

Calculate the share before applying costs

Suppose a fictional technician's opening odometer is 41,200 km and the closing reading is 63,600 km. Total distance is 22,400 km. A complete log supports 9,520 business kilometres, leaving 12,880 personal kilometres.

Assume supported annual operating costs of $3,200 fuel, $1,800 insurance, $900 maintenance, and $200 licence and registration fees. They total $6,100. Applying the illustrative share gives $6,100 × 42.5% = $2,592.50.

This simplified result leaves out interest, leasing, capital cost allowance (CCA), recoverable sales tax, parking tied directly to business trips and other adjustments. It is not a completed tax claim. The personal share of these operating costs is $3,507.50. Both shares add up to $6,100.

Review the costs as well as the kilometres

Keep invoices and statements for fuel, insurance, maintenance, licensing, and other relevant categories. A bank statement alone may not explain the purchase or tax treatment. The business-use allocation does not turn an otherwise ineligible payment into a deductible cost.

Buying a vehicle is different from paying to run it. Capital cost allowance (CCA), the tax deduction for eligible long-term property, needs a separate review. Interest and lease costs can also have limits and conditions. The type of vehicle and your business structure matter. Check the current rules rather than copying an old yearly limit.

Do not claim the same trip or cost twice through another reimbursement process. If there are multiple businesses, vehicles, or users, preserve the allocations that prevent overlapping claims. Direct business parking or tolls should also be identified separately and reviewed under the relevant rules.

Review the log while corrections are still possible

A full-year log provides stronger support than a percentage reconstructed from memory. CRA has guidance on simplified logbook approaches in qualifying circumstances, but a short sample is not automatically acceptable. Verify the base-period requirements and conditions before relying on one.

During the year, compare the distance record with appointments, major service odometer readings, and vehicle changes. Ask about missing periods promptly. If evidence is incomplete, flag the gap rather than presenting an unsupported percentage as precise.

Use business kilometres and total kilometres for the same vehicle and dates. Do not divide a few busy months of business trips by a full-year total from another vehicle or ownership period. Write down the start and end dates, especially if you replace a vehicle or start the business during the year.

Bookwits can coordinate receipt requests, periodic log reviews, and year-end handoffs. It is not a mileage tracker or deduction calculator. Keep the actual log, cost evidence, and reviewed calculation together so another preparer can follow the result.