Happy New Year! Take a moment to snap a pic of your odometer right now! If you own your own business, and you are not incorporated (so, a sole proprietorship or a partnership), you are required by CRA to keep a vehicle log if you want to claim your vehicle expenses. And knowing your odometer reading at the beginning of the year and at the end of the year is part of that calculation! If you use your vehicle 50% for business, and 50% for personal, then, you can claim 50% of all your vehicle expenses on your tax return, reducing your taxable business profit! But, in order to know the percentage of vehicle expenses that you can claim, you need to keep a vehicle log. Manually, or by using an app on your smart phone! (There are lots to choose from!).
If you use your vehicle 90% or more for business, you can claim 100% of your vehicle expenses! But you need to also be able to prove it! So CRA suggests to keep a vehicle log for three months as a baseline to support the 100% claim if ever reviewed.
To find out more about claiming vehicle expenses right from the horse’s mouth, here’s the link to find out more!