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Taxes

CRA Records to Support Vehicle Expenses Claims

Marc Chaput
March 15, 2019

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When using a vehicle to earn income, it's important to keep track of expenses. That way, claiming deductions on income tax returns is easier to figure out. In the event you are called upon to provide evidence for claims, you'll be ready.

Mileage logbook - showing how expenses are apportioned

Expenses incurred by the use of a vehicle must be clearly described. That means showing exactly how a vehicle is used, and why. Deductions and input tax credits can only be claimed on work-related expenses.  Claims are calculated based on mileage. In order to support claims, it's important to be able to show records of mileage logged to earn income. There are no specific rules for documentation, but records must be clear and easily understood.  Though there are no rules for how to keep records, the CRA recommends a full logbook. A full logbook should cover the whole tax year. It will describe each business trip's purpose, destination and mileage.

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Automatic, accurate mileage reports.

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Do you need extensive CRA records?

If mileage travelled for business is low, extensive records are not needed. If business activity increases, so do vehicle expenses and related claims. At that point, detailed documentation becomes necessary.  Records such as a diary showing the address and purpose of visit for each might be enough to show the extent of business driving. Documents such as invoices and receipts can prove business travel. In case of an audit, the CRA would also consider:

     
  • Whether the taxpayer owns another vehicle for personal use
    •  
  • The type of vehicle
    •  
  • The amount of travel the type of business would require
    •  
  • Others who might use the vehicle
    •  
  • The vehicle's insurance
    •  
  • Indications of personal use.

How the vehicle is used would be considered in light of the specific business's operations. Claims would only be denied if business use seemed to be exaggerated. Evidence in the form of logbooks would help clear up any confusion.

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MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

View
MileIQPricing
Open MenuClose Menu

When using a vehicle to earn income, it's important to keep track of expenses. That way, claiming deductions on income tax returns is easier to figure out. In the event you are called upon to provide evidence for claims, you'll be ready.

Mileage logbook - showing how expenses are apportioned

Expenses incurred by the use of a vehicle must be clearly described. That means showing exactly how a vehicle is used, and why. Deductions and input tax credits can only be claimed on work-related expenses.  Claims are calculated based on mileage. In order to support claims, it's important to be able to show records of mileage logged to earn income. There are no specific rules for documentation, but records must be clear and easily understood.  Though there are no rules for how to keep records, the CRA recommends a full logbook. A full logbook should cover the whole tax year. It will describe each business trip's purpose, destination and mileage.

Do you need extensive CRA records?

If mileage travelled for business is low, extensive records are not needed. If business activity increases, so do vehicle expenses and related claims. At that point, detailed documentation becomes necessary.  Records such as a diary showing the address and purpose of visit for each might be enough to show the extent of business driving. Documents such as invoices and receipts can prove business travel. In case of an audit, the CRA would also consider:

     
  • Whether the taxpayer owns another vehicle for personal use
    •  
  • The type of vehicle
    •  
  • The amount of travel the type of business would require
    •  
  • Others who might use the vehicle
    •  
  • The vehicle's insurance
    •  
  • Indications of personal use.

How the vehicle is used would be considered in light of the specific business's operations. Claims would only be denied if business use seemed to be exaggerated. Evidence in the form of logbooks would help clear up any confusion.

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