Mileage deductions are one of the most valuable — and most commonly mishandled — tax claims for self-employed Canadians. Here’s how to do it right.
Who Can Claim Vehicle Expenses?
Self-employed individuals who use a vehicle to earn business income can deduct a portion of expenses on Form T2125. The deductible portion is: (Business km ÷ Total km) × Total vehicle expenses.
Eligible expenses include fuel, insurance, maintenance, license fees, loan interest (max $10/day), CCA, and leasing costs.
The Mileage Log: Your Most Important Document
The CRA requires a contemporaneous mileage log — recorded at the time of each trip, not reconstructed at year-end. A valid log includes:
- Date of trip
- Starting and ending odometer readings
- Destination
- Business purpose
- Total kilometres driven
Record your odometer on January 1 and December 31 each year.
Apps That Make This Easier
MileIQ, TripLog, and Driversnote automatically track trips by GPS. The CRA accepts digital logs as long as they contain the required information.
What Counts as a Business Trip?
- Driving to meet a client
- Travelling to a job site or work location
- Business errands (bank, post office, supply store)
- Attending industry events or courses
Commuting from home to your regular office does not count.
Tips for Business Owners
- ✅ Start your log January 1 and keep it going all year
- ✅ Record every trip in real time — use an app
- ✅ Keep all receipts for fuel, insurance, and repairs
- ✅ Be honest about personal use
- ✅ Keep records for at least six years
Questions about vehicle deductions? CMP Accounting can help.