Self Employed

# How to Deduct Mileage When You're Self-Employed

If you're a self-employed worker who uses your personal car for business purposes, you could be leaving money on the road. The CRA allows you to deduct motor vehicle expenses on your taxes. Here's what you need to know about deducting your business mileage in Canada.

## Writing off motor vehicle expenses

Some say the tax code is built with the intention of incentivizing businesses and entrepreneurship. The CRA knows there's a cost associated with using your motor vehicle for business reasons. To address this, the government agency allows you to deduct a portion of your motor vehicle expenses during tax time.  The CRA lets you deduct the following for your personal vehicle:

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• Gas and oil
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• Insurance
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• Interest
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• Maintenance and repairs

## Why you must track kilometres

• (Business kilometres / Total kilometres) X Total Vehicle Expenses = Motor Vehicle Deduction

Let's say Melissa is a real estate agent in the Vancouver area. She uses her personal car to meet clients, vet properties and general business purposes. Melissa wants to calculate her motor vehicle expense deduction for tax time.  She keeps diligent track of her expenses and uses a mileage tracking app like MileIQ to log all her drives. Her figures look like:

• License and registration fees = \$100
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• Gas and oil = \$2,400
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• Insurance = \$1,900
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• Interest = \$800
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• Maintenance and repairs = \$200
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• Total vehicle expenses = \$5,400

Melissa drove a total of 40,000 kilometres for the year, with 32,000 kilometres being for business. Her deduction would be at least \$4,320. She calculates her deduction like this:

• (32,000 business kilometres / 40,000 total kilometres) X \$5,400 total vehicle expenses = \$4,320 total deduction

## What records do you need to keep?

For your CRA mileage log, you should keep track of the total kilometres you drive and those drives for work reasons. For the business trips, keep track of:

• The destination
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• Date of trip
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