Mileage Deduction Canada: How to Claim Vehicle Expenses

If you use your vehicle for business purposes as a self-employed Canadian or contractor, you can deduct a portion of your vehicle expenses from your income. The CRA requires solid record-keeping — specifically a mileage logbook — but the deduction can be substantial, especially for tradespeople, delivery workers, sales professionals, and anyone who regularly drives to client sites.

Vehicle Mileage Deduction Calculator

How the CRA Vehicle Deduction Works

Unlike the US which has a simple per-mile rate, Canada requires self-employed people to track actual vehicle costs and then apply the business-use percentage. Your business-use percentage is simply:

Business Kilometres / Total Kilometres for the Year = Business Use %

You then apply this percentage to every eligible vehicle expense to determine the deductible amount.

What Vehicle Costs Are Deductible?

• Fuel: Gasoline, diesel, or EV charging costs
• Insurance: Full annual premium, prorated by business use
• Maintenance and repairs: Oil changes, tires, brake work, any garage repairs
• Licensing: Annual registration fees and license plate stickers
• Car washes: Yes, these count if the vehicle is used for business
• Lease payments: Up to a CRA-set monthly limit (currently $1,050/month for most vehicles)
• Financing interest: Interest on an auto loan, up to $300/month
• Capital Cost Allowance (CCA): For owned vehicles, you can deduct depreciation (Class 10 at 30% or Class 10.1 at 30%, capped at $36,000 for most vehicles)

The Mileage Logbook: Non-Negotiable

The CRA absolutely requires a mileage log to support vehicle deductions. Without one, the CRA can — and will — disallow your entire vehicle claim in an audit. Your log must record:

• Date of each trip
• Starting and ending odometer reading
• Destination and purpose of trip
• Total kilometres driven

You must also record your odometer at January 1 and December 31 each year to establish your total annual kilometres.

The Simplified Logbook Method

If you've kept a complete logbook for one full year and your vehicle use pattern is consistent year over year, the CRA allows a simplified approach: keep a full logbook for only three consecutive months per year and extrapolate the business-use percentage. This is called the "sample period method" and can significantly reduce record-keeping burden.

What Doesn't Count as Business Driving?

The CRA is strict about what qualifies. Common non-deductible trips:

• Commuting from home to your regular place of work
• Personal errands, even if done on the way to a client
• Driving to pick up personal groceries or run personal errands
• Driving your kids to school (not business)

If your home is your principal place of business, then driving from home to a client site IS a business trip. This is one of the benefits of the home office deduction — it makes your home the starting point for business travel.

CCA for Owned Vehicles

If you own your vehicle outright or have purchased it on financing, you claim Capital Cost Allowance (depreciation) rather than lease payments. Most passenger vehicles fall into:

• Class 10: Vehicles costing under $36,000 — 30% declining balance
• Class 10.1: Vehicles costing $36,000+ — same 30% rate but each vehicle tracked separately, capital cost capped at $36,000

In the first year, you can only claim half the normal CCA (the "half-year rule").