Are you keeping a mileage logbook if you're self-employed and use your vehicle for business purposes? If not, then it is something you need to consider if you want to receive mileage reimbursement.
If the Canada Revenue Agency (CRA) audits you and you don't have a logbook, the CRA may reject your claims for motor vehicle expenses. By following our mileage log guide and tips you can make sure that the CRA has no reason not to reimburse you the amount you are entitled to. The CRA states that keeping a logbook is the best way to ensure that you have the proof in case of an audit.
A mileage log, also referred to as a logbook, is a record of the trips you take with your vehicle. If you use the same vehicle for business and private purposes, then your log needs to contain a record of both. The reason you need to log both is that you need to be able to prove that you traveled the amount you claim for business purposes only.
In your logbook, every entry should include the date, reason for the trip, destination, and distance traveled. You should also keep track of your odometer readings at the start and end of the year. You can check out our free CRA mileage log template here to see an example, or download the Driversnote app and test it out yourself.
Depending on your circumstances, there may be some differences in how you keep a logbook. There are two different methods of keeping a mileage log that we will discuss here.
By using the logbook method, you are supposed to record all of your driving in a mileage log to support your reimbursement claims.
If you use the full logbook method, you must keep track of your total kilometres driven as well as any business-related drives. That means you need to track every kilometre driven and categorize it as a personal or business trip.
According to the CRA, you can deduct expenses only if they are reasonable and if you have the receipts to support them. To prove you drove the kilometres you are claiming, you need to consistently log the following:
Recording this should become like a habit for you if you want to make sure you have everything you need for the CRA. By using a logbook app most of this is logged automatically which can save you a lot of time.
The simplified logbook method is about establishing a “base year”. What that means is that you need to keep a logbook for 12 months and based on that you can use a three-month sample from the current year to forecast your business usage for the entire year. What you need to record is the same as it is for the full logbook method.
The CRA provides the following formula for using the simplified logbook method:
(Sample year period % ÷ Base year period %) × Base year annual % = Calculated annual business use
To get all deductions you are entitled to, you need to keep receipts of any expense you wish to have reimbursed. You need to keep the receipts for all repairs, maintenance expenses, tolls, and anything else that may classify as a reasonable expense. Some expenses classified as reasonable can be:
We recommend you keep your logbooks for 6 years after the last time you were assessed. This is the same whether you are self-employed or an employee.
If you use the simplified logbook method, you must keep the "base year" logbook for six years, beginning with the end of the most recent tax year in which it was used as a base year. For example, if you recorded your base year in 2018 and used it to establish business use in 2020, you must keep the base year logbook record until at least 2026.
Ditch the physical logbook
For more information on how to keep a cra compliant log book and all CRA requirements for 2021, you can check out our updated CRA mileage guide. You can keep a logbook whether you own a small business or are self-employed by writing down all relevant information in a paper notebook or saving it in an excel file, but it is easier to use a mileage logbook app to streamline the record-keeping process. If you have any questions don’t hesitate to contact us at firstname.lastname@example.org
You can keep a logbook in the format that suits you best - it does not matter much as long as your logbook is compliant. You can use a physical logbook, a PDF, a spreadsheet or a mileage tracking and logging app such as Driversnote.
After keeping a logbook for one full year to create the base year, you can use a three-month sample logbook to forecast company use for the entire year, as long as the usage is within 10% of the base year's results. Businesses must demonstrate that the vehicle's use in the base year is still typical of its normal use.
Yes! Keep a separate logbook for each vehicle that details the total and business kilometres you drive, as well as the cost to operate and maintain each car if you use more than one. Calculate the expenses for each vehicle separately.