Who Can Claim Mileage on Taxes?
If you use your vehicle for work or business purposes in Canada, you may be eligible to claim mileage on your tax return. Common qualifying activities include:
- Traveling to client sites
- Meeting customers
- Attending events
- Performing other work-related tasks
However, you cannot claim mileage if:
- Your employer reimburses your vehicle expenses.
- Your vehicle is used solely for personal purposes or commuting.
Table of Contents
What is a Mileage Claim?
A mileage claim is a tax deduction for expenses related to using your vehicle for work or business. These expenses can include:
- Fuel or electricity (for electric vehicles)
- Repairs and maintenance
- Insurance
- Leasing costs
- Licensing and registration fees
- Interest on vehicle loans
- Capital Cost Allowance (CCA)
If your vehicle is used for both personal and work purposes, you can only claim expenses incurred during work-related use.
How to Claim Mileage on Taxes
For Employees
To calculate mileage as an employee:
- Calculate Work-Related Use: Divide the kilometres driven for work by the total kilometres driven that year.
- Apply to Expenses: Multiply this percentage by your annual vehicle expenses.
- Adjust for Employer Allowance: Deduct any non-taxable allowance or reimbursement received from your employer.
Formula:
Eligible car expenses = ((work-related km / total km) × annual vehicle expenses) – employer reimbursement
Example:
- Work-related kilometres: 4,000 out of 10,000 km
- Vehicle expenses: $6,500 (Gas: $2,500, Repairs: $1,000, Insurance: $3,000)
- Employer allowance: $500
Claim: ((4,000 / 10,000) × $6,500) – $500 = $2,100
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For the Self-Employed
Self-employed individuals have two methods to claim mileage:
1. Full Logbook Method
Track all your business trips, including:
- Date and purpose of trips
- Start and end locations
- Kilometres driven
Formula:
Business use percentage = (business km / total km) × 100
Example:
- Business kilometres: 6,000 out of 10,000 km
- Vehicle expenses: $5,000
Claim: (6,000 / 10,000) × $5,000 = $3,000
2. Simplified Logbook Method
Use a full logbook for one base year to calculate your business use percentage. In subsequent years, track mileage for a three-month sample and adjust as follows:
Formula:
Annual percentage = (Sample year % / Base year %) × Base year %
Example:
- Base year business use: 50%
- Sample period business use: 52%
Calculation: (52% / 48%) × 50% = 54%
If the new percentage falls within 10% of the base year, you can use the simplified method.
Recordkeeping Requirements
Proper records are essential for both employees and the self-employed:
- Log work-related kilometres separately from personal use.
- Keep receipts for all vehicle expenses.
- Maintain odometer readings at the beginning and end of the year.
These records are critical for CRA audits and must be retained for six years.
Where to Claim Mileage on Your Tax Return
For Employees
- Use Form T777 (Statement of Employment Expenses).
- Enter vehicle expenses on Line 22900 of your tax return.
- If claiming CCA, complete Part A or B on the form.
For Self-Employed Individuals
- Use Form T2125 (Statement of Business or Professional Activities).
- Report business use of your vehicle in Chart A – Motor Vehicle Expenses.
- If claiming CCA, complete Area A on the same form.
- For Quebec residents, use Form TP-80-V.
Final Tips for Maximizing Mileage Deductions
- Choose the logbook method that offers the highest deduction.
- Use a mileage-tracking app to simplify recordkeeping.
- Consult a tax professional for personalized advice.
By following these steps, you can ensure your vehicle expenses are accurately reported and maximize your deductions at tax time.
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