Vehicle Expenses in Canada

Many proprietorships, partnerships and limited companies rely on a vehicle to conduct business. Real estate agents, small restaurants, construction contractors and sub-contractors, to list some, use a vehicle to see clients and carry supplies. So what are the requirements and eligible vehicle expenses available to business? Here are some guidelines to help you:


Watch the following video for more information on Canadian Vehicle Expenses

#1) Keep a mileage log – the Canada Revenue Agency demands that you keep a mileage log for business purposes. Here is a direct quote from the CRA’s website:

“The best evidence to support the use of a vehicle is an accurate logbook of business travel maintained for the entire year, showing for each business trip, the destination, the reason for the trip and the distance covered.”

Reference:

http://www.cra-arc.gc.ca/whtsnw/lgbk-eng.html

Without this documentation, the CRA can disallow vehicle expenses. A mileage log also determines an accurate percentage of vehicle use for business purposes, because it correctly calculates the business use against the total kilometers driven over the entire year.

#2) Keep all pertinent vehicle receipts – another important supporting measure for auto expenditures is to keep all your receipts for your vehicle. Although bank and credit card statements can be a supporting measure to show vehicle expenses, the CRA expects original receipts for expenses pertaining to your vehicle business use.

#3) Designate one vehicle for business purposes – it is important to only designate one vehicle for business use. If you change vehicles partway through the year, however, you close off the old mileage log upon the disposition of the old vehicle with the closing mileage, and then open up a new mileage log for the new vehicle.

#4) What can be expensed – vehicle fuel, repairs and maintenance, vehicle insurance, business parking, licensing and registration, vehicle loan interest and a vehicle lease can be eligible claims against your business income. Keep in mind, if you are using your own private vehicle for business use, only a percentage can be claimed of these eligible expenses.

We hope this blog is helpful to you as you conduct business in your vehicle!

Seianna Financial Services is “Serious About Your Business”. Go to our bookkeeping page and check out our prices, service guarantee and to contacts to find an office most convenient for you. We can do bookkeeping for clients in every province and territory except Quebec.

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