Taxes
If you drive your own personal vehicle for business purposes, the CRA lets you claim that mileage on taxes. Let's go over how the self-employed can get a deduction for their mileage.
How to claim mileage on your taxes
The CRA knows there's a cost to using your personal vehicle for business reasons. That's why it allows you to claim motor vehicle expense for some tax relief. This deduction can lead to some large savings on your income tax bills.
How to calculate your deduction
You can deduct the kilometres related to your business drives. The value of that deduction depends on how much you drive during the year. The CRA has an easy-to-follow formula for calculating your deduction for mileage: (Business Kilometres √∑ Total Kilometres) X Total Vehicle Expenses = Motor Vehicle Expense Deduction. For example, let's say your total expenses for your vehicle were $5,400. This includes license and registration fees, gas, interest, insurance and maintenance. If you drove 30,000 kilometres for the year and 27,000 of those were for business, you'd get a deduction of $4,860 (27,000 business kilometres √∑ 30,000 kilometres) X $5,400 = $4,860. You can also add any parking fees or other business insurance with your motor vehicle expense deduction.
