Vehicle Expenses and Mileage Log: The Self-Employed Worker’s Guide

Vehicle expenses are among the most valuable deductions for self-employed workers — and among the most audited by the CRA and Revenu Québec. The reason is simple: many people claim without being able to prove. This guide covers how to keep a bulletproof mileage log, which expenses to deduct, how to calculate the business portion, and the traps that sink audits.

The principle: everything flows from the mileage ratio

You do not deduct “your car”: you deduct the business-use proportion of its costs. The formula never changes:

business km ÷ total km for the year × total vehicle expenses = deductible amount

15,000 business km out of 25,000 total km = 60% of your eligible expenses. Without those two numbers, nothing holds — hence the log.

What counts as a business trip?

• ✔️ Meeting a client or supplier;
• ✔️ Picking up materials or supplies;
• ✔️ Driving to a job site or mandate location;
• ✔️ Dropping off documents, business banking;
• ✔️ Training sessions and professional events;
• ❌ Commuting between home and a regular place of work: that is personal driving, even with your company logo on the door.

The home office advantage: if your home is your principal place of business, trips from home to your clients generally become business travel. One more argument for the home office.

The mileage log: the cornerstone

For every business trip, record:

• the date;
• the destination;
• the purpose of the trip (and the client’s name);
• the number of kilometres.

Add the odometer readings on January 1 and December 31 to establish the annual total. An app, a notebook in the glovebox, or a weekly transcribed voice memo: the format hardly matters, consistency matters completely.

After one fully documented base year, the authorities accept a simplified log: keep a representative three-month sample and extrapolate, as long as usage remains comparable (within about 10%). But that first full year cannot be skipped.

Eligible expenses

Note: interest, leasing and CCA are subject to prescribed ceilings that change periodically — your accountant or the CRA and Revenu Québec websites have the current year’s amounts. Traffic tickets, on the other hand, are never deductible.

Buy or lease: the tax angle

When leasing, you deduct the (capped) payments prorated for business use; when buying, you deduct the (capped) interest plus declining-balance depreciation in class 10 or 10.1. Leasing simplifies the math and smooths the expense; buying often wins if you keep vehicles a long time. The real answer depends on your numbers — not on the dealership’s salesperson.

Don’t forget the sales taxes: ITCs and ITRs on your vehicle

If you are registered for GST/QST, you also recover the taxes paid on your vehicle expenses, prorated for commercial use. Gas, maintenance, leasing: the mileage log earns its keep twice — once for income tax and once for sales taxes (our GST/QST guide explains ITCs/ITRs).

Tracking it with InnoBooks

• ✅ Vehicle expenses recorded with a receipt photo and a dedicated category;
• ✅ Taxes broken out automatically for your ITCs/ITRs;
• ✅ Annual report by category: gas, maintenance, insurance — ready for the T2125/TP-80;
• ✅ The rest of your books in the same place.

Frequently asked questions about vehicle expenses

Can I just use a per-kilometre rate like 70¢/km instead of actual expenses?

No. Per-kilometre rates apply to allowances paid to employees, not to the self-employed. You must claim your actual expenses multiplied by your business-use ratio — which is why receipts and the log matter so much.

I have two vehicles. How does that work?

Each vehicle gets its own calculation: its own log, its own expenses, its own ratio. Concentrating business use on a single vehicle dramatically simplifies the record-keeping.

I didn’t keep a log this year. Can I still claim?

Claiming a percentage “by feel” is risky: in an audit, without a log, the deduction can be reduced or denied entirely. Reconstruct what you can (calendar, client invoices, emails) for this year — and start the log today.

The vehicle is in my spouse’s name. Can I deduct?

What matters is who actually bears the costs to earn business income. If you pay for the gas and maintenance of your business trips, document it clearly (payments from your account). When in doubt, ask your accountant.

Bottom line

The vehicle deduction is won or lost on the mileage log: odometer readings in January and December, every business trip recorded with its purpose, receipts kept for six years. The math itself is mechanical — and business parking is 100% deductible as a bonus.

Your gas receipts deserve better than a glovebox. Try InnoBooks for free and keep every vehicle expense filed, taxed and tax-ready.