Vehicle Expenses Business Canada CRA 2025

How self-employed Canadians claim vehicle expenses with the CRA — mileage logs, deductible costs, and maximizing your motor vehicle deduction.

How the CRA Allows Vehicle Expense Deductions

Self-employed Canadians who use a vehicle to earn business income can deduct vehicle expenses based on the proportion of kilometres driven for business versus total kilometres driven for the year. This is called the "actual expense method" and requires keeping a detailed mileage logbook throughout the year. The deductible amount = (business km / total km) × total vehicle expenses.

There is no flat per-kilometre rate available to self-employed workers for claiming vehicle expenses (unlike employees who can sometimes use the simplified method). Self-employed individuals must use the actual expense method with a logbook.

What Counts as Business Kilometres

• Driving to client meetings, job sites, or client locations
• Travel to purchase business supplies or materials
• Trips to the bank, accountant, or lawyer for business purposes
• Driving to attend professional development events or conferences
• For delivery and rideshare workers: all driving while on an active trip or searching for fares/deliveries

What does NOT count as business: commuting from home to a regular fixed workplace, personal errands, vacation travel even if you mix in some work activity, and driving between home and a client when your home is your regular business base (this is generally personal travel unless home is your principal place of business).

Deductible Vehicle Expenses

Expense	Deductible (Business %)	Notes
Fuel and oil	Yes	Keep all receipts
Auto insurance	Yes	Annual premium × business %
Licence and registration	Yes	Annual fees
Repairs and maintenance	Yes	Oil changes, tires, brakes, etc.
Car wash and detailing	Yes	Especially for client-facing use
Parking (business trips)	Yes	Keep parking receipts
Loan interest	Yes (max $10/day)	CRA imposes a daily cap on interest deduction
Lease payments	Yes (max $1,050/month)	CRA caps monthly lease deduction for passenger vehicles
Capital Cost Allowance (CCA)	Yes (Class 10 or 10.1)	Depreciation on vehicle value

Vehicle Cost Caps for Expensive Cars

The CRA limits deductions for "passenger vehicles" (non-commercial vehicles) to prevent businesses from deducting the full cost of luxury cars. In 2024–2025, the maximum capital cost eligible for CCA on a passenger vehicle is $37,000 (Class 10.1). Lease costs are capped at $1,050/month (before GST/HST). Loan interest is capped at $10/day. These limits do not apply to commercial vehicles (trucks, vans over a certain weight used exclusively for business).

The Mileage Logbook: Your Most Important Document

Without a mileage logbook, the CRA can disallow your entire vehicle expense claim. Your log must record for every business trip: the date, starting location, destination, business purpose, and kilometres driven. Record your odometer reading at January 1 and December 31 each year. Apps like MileIQ, TripLog, or simply a notebook in your car all work. Digital logs are accepted as long as they include all required information.

A simplified logbook is available if you maintained a full logbook for an initial base year and your business use percentage has not changed by more than 10%. After the base year, you maintain the simplified log for a sample period of at least one continuous 3-month period every year. This reduces the ongoing administrative burden for established business drivers.

CCA on Your Vehicle: Class 10 vs. Class 10.1

Most passenger vehicles are Class 10 (30% declining balance CCA rate) if they cost $37,000 or less, or Class 10.1 (also 30%) if they cost more. Class 10.1 vehicles are tracked individually (not in a pool) and have special rules on disposal. Electric and hybrid vehicles may qualify for accelerated CCA under Class 54 or 55. In the year of purchase, the half-year rule limits your CCA claim to 50% of the normal annual amount — a vehicle bought in October gets the same CCA deduction as one bought in January.