You can save a lot of money by maximizing your tax deductions. The easiest way to do that is by having a reliable mileage tracking app (also referred to as a log book app) that is also CRA compliant. In this post, we will share with you what you need to know about choosing the best app for your needs and maximizing your mileage tax returns in 2021.
One of the questions we get asked often is whether there is an option for a free mileage tracker and the answer is yes! There are a couple of apps out there that offer free CRA compliant mileage tracking.
The Driversnote mileage tracking app is one example of a free option where you can track up to 20 trips per month entirely for free. The app is ad-free and includes automatic motion tracking which means that you don’t have to always remember to log a trip manually - your phone will do the work for you.
There are a couple of things you need to look out for when choosing a mileage tracking app. If you are located in Canada, then you need an app that is compliant with the CRA requirements. It depends on your needs but generally, you likely need to make sure that the app has the correct CRA mileage rates for 2022. If you are logging trips from the previous year, use the mileage rate for 2021 instead.
If you need to track your miles as part of your job, you may need to set a custom mileage rate that your work has set for you. In that case, make sure to pick an app that allows you to set your custom rate so that you can be reimbursed the proper amount. If you need to log some trips for 2020 or previous years, most apps out there offer that as well. Check here for information on CRA mileage rates for 2020 and before.
Yes, most apps out there will calculate your reimbursement by using the CRA standard mileage rate for 2021 or a custom one set by you. However, an app can only calculate your reimbursement properly if you are diligent about your use of it. We recommend you check your app every few days and review your trips carefully to make sure everything was tracked and is in order. If the tracker happened to miss a trip, you can usually add it manually but that is rare and most apps are great at automatically tracking your trips.
For extra safety, you can get a device such as the iBeacon. With an iBeacon, the app will automatically record the trips you take in your vehicle only, avoiding tracking trips where you are a passenger, on your bicycle or with public transport. That way you will spend even less time reviewing your trips.
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The mileage tracker app also serves as a logbook for you. This means that you do not have to keep any extra records of your trips apart from what is in the app. Your trips are safely stored on a cloud so if you lose your phone, your trips will be safe and you will have accurate records of your past journeys. Most apps are also able to generate a PDF report for you so that you can easily hand it over to your boss or accountant without having to do any manual work.
Mileage tracking apps can generally be useful to everyone but they are best for individuals and teams who need accurate logs of their trips. Often that is self-employed individuals, employees who use their car for both business and personal usage, Uber or Lyft drivers, delivery service workers, consultants and anyone else who needs to take trips for business purposes. If you are eligible for mileage reimbursement, you can use our calculator to find out the approximate sum you could get from tax returns, and decide if using a log book app is right for you.
We recommend you try a few different log book apps before deciding on the one that works best for you. The good news is that most apps offer either a free version or a free trial so nothing is stopping you from trying out a few. When choosing, look out for whether they have the following features:
The Driversnote app offers all of these options and can help you track your mileage with ease.
If you have any questions about how mileage tracker apps work or whether it would be a good solution for you, don’t hesitate to contact us at email@example.com.