UPDATED SEP 24, 2021 • 9 MIN READ
Depending on your circumstances, there may be different legal or non-legal criteria for keeping a record of your vehicle expenses.
Your employer may specify the records they require, and if you're claiming a tax deduction for work-related transportation expenditures, the CRA has requirements that must be followed.
We'll look at how your mileage logging requirements differ depending on which reporting method you select.
Recording all of your driving in a mileage logbook is, according to the CRA, the best evidence to support claiming a deduction for your business travel.
Using the full logbook method, you must keep a record of your total kilometres driven, as well as every business-related drive. In other words, recording each and every kilometre driven with a breakdown of personal or business driving.
For any trip logged as business-related, you’ll need to note the following:
In addition, you’ll need to report on the odometer reading at the start and end of the year (or fiscal period). Alternatively, if you change vehicles during the year, you’ll need to record the dates that you changed vehicle as well as the odometer reading when the change was made.
Motor vehicle expenses can only be deducted if they are reasonable and if you have receipts to back them up, according to the CRA.
Finally - if you use more than one vehicle for business purposes, remember to record the kilometres for both vehicles separately, as well as recording your expenses for each vehicle. Basically, you must calculate your deduction for each vehicle separately in order to get proper mileage reimbursement.
Once you have a full 12 months of driving (both business and personal) recorded in a logbook, you can use that to establish a “base year” for your business usage.
When the base year is established, you can then use a three-month sample from the current year to forecast your business usage for the entire year.
The requirements for what you need to record are the same as for the full logbook method.
To claim a deduction or reimbursement using the automobile allowance rate, you simply need to record all kilometres driven for business.
Once again, for any trip logged as business-related, you’ll need to note the following:
Number of kilometres driven
Although you don’t need to provide written evidence, you do need to show that you drove the kilometres being claimed. Using an automatic logbook application or exhibiting diary records of work-related driving are two standard ways to provide this. You can do that by getting a free mileage log app such as Driversnote or by something as simple as making your own Google Sheet. Find the method that works best for you and log your trips consistently.
Paper, diary, account book, digital spreadsheets, CSV files, PDF files, and XLSX (Microsoft Excel) are all accepted by the CRA. In other words, the format does not matter as long as the right records are present.
Your employer should tell you which records they require, as well as the forms they need for the process.
Paper logbooks are available from many newsagents, and are suitable so long as you remember to fill them in at the start and end of each trip.
Should you prefer an automatic solution, an automated mileage logbook app can help you to record everything you need to claim your work-related car expenses from the CRA or your employer.
No. There's nothing in the law requiring you to log odometer readings for each trip. When calculating your car expenses using the logbook technique, you must record your odometer at the beginning and end of the period covered by the logbook - for example, at the beginning and end of the year.
Keep in mind, though, that your company may need you to record odometer readings more frequently.
There are no requirements for exactly how you calculate your mileage as such, except that you have to record the mileage of each trip in order to get federal gas reimbursement. That means either
Using a mileage app is probably the simplest method. There are a lot of apps out there that are aimed to tackle the problem of tracking and registering your distance, and Driversnote is one of them. The app is available for both iOS and Android and for both self-employed and employees.
Yes! If you drive the vehicle(s) for personal use as well, you also need to be able to show the portion of use that is for business. This is calculated as a proportion of total kilometers driven for both professional and personal reasons. This entails keeping track of all excursions and then determining the percentage of time spent on business.
Whether you are an individual taxpayer or self-employed, the CRA requires you to keep your records for six years from when you lodge your tax return, in case they need you to substantiate your claims.
If you use the simplified logbook method, you need to retain the “base year” logbook for six years from the end of the most recent tax year that it was used as a base year. For example, if your base year was recorded in 2018, and you used it to establish business use in 2020, you must keep the record of the base year logbook until at least 2026.
Later on, as an employee, you may be asked to prove your expenses (which may include mileage for a variety of reasons). Because this can happen through no fault of your own, it's a good idea to keep copies.
If you use a digital mileage log and tracker, you'll be more likely to have enough records on hand if you need them.
If you get audited, the CRA can ask for mileage logs, which are accepted in any of the formats mentioned above. They might also ask for proof of your expenses in the form of tax invoices or receipts so make sure to keep these stored safely somewhere.
To speed up the process and avoid errors, you can order your mileage logs and records by year while maintaining a minimum of six years’ data as per the CRA requirements.
This material has been prepared for general informational purposes only, and should not be taken as professional advice from Driversnote. You should consider seeking independent legal, taxation, or financial advice from a professional to check how this information relates to your own circumstances. Relevant laws also change from time to time.