The topic of this blog post is recording the business use of your vehicle, in order to claim part of the cost and reduce your taxable income. As many of you know, you can claim part of the cost of gas, insurance and maintenance of your vehicle when using it for business purposes. The challenge is keeping good records, which is important, especially if your expenses are being reviewed by the CRA.
As taken directly from the CRA’s website; “You can deduct motor vehicle expenses only when they are reasonable and you have receipts to support them. To receive the full benefit of your claim for each vehicle, keep a record of the total kilometres you drive and the kilometres you drive to earn business income. For each business trip, list the date, destination, purpose, and number of kilometres you drive. Record the odometer reading of each vehicle at the start and end of the fiscal period.
If you change motor vehicles during the fiscal period, record the dates of the changes and the odometer readings when you buy, sell, or trade the vehicles.”
- Keep a trip log for the year, at the top of the first page note the vehicle’s beginning odometer reading, and record each trip with the following information:
Vehicle KM Log Year:__________
Odometer Reading on Jan 1:_______________
Destination: Address/Business Name
Purpose: e.g. Client mtg.
- At the end of the year note the ending odometer reading
- You need to record the total KMs driven and the business KMs driven
- Keep separate logs for different vehicles
If you may be thinking that mid-November is a not the ideal time to find out this information, I have an idea that may be helpful. You can create a trip log by using your calendar, appointment books, receipts from business purchases or business related meals, sales invoices or anything that will help you make a list of business trips driven in your vehicle. Once you have the list in chronological order, you can fill in the KMs using Google Maps. An estimate of your beginning odometer reading is acceptable, as long as it is reasonable.
Let me know if you found this helpful or if you have any questions. I’m happy to help!