Understanding Vehicle Expenses: Logbooks, CCA, and Pro-Rating

If you use your car for both business and personal purposes, the Canada Revenue Agency (CRA) requires you to claim only the business-use portion of your vehicle expenses.

That means you’ll need to track your mileage, understand how CCA (Capital Cost Allowance) works, and pro-rate your costs properly. Let’s break it all down step by step.

1. Keep a Logbook – It’s Your Best Friend

Your logbook is the most important piece of evidence when claiming vehicle expenses. It shows how much of your total driving is business-related.

Each trip should include:

• The date of the trip

• The destination

• The purpose of the trip

• The distance (km) driven

At the end of the year, calculate your business-use percentage:

Business km ÷ Total km = Business-use %

💡 Tip: You only need to keep a full-year logbook once. After that, you can use a 3-month sample logbook to estimate future years — as long as your business driving pattern stays consistent.

2. What Vehicle Expenses You Can Claim

You can deduct the business portion of most vehicle-related costs, including:

• Gas and oil

• Insurance

• Repairs and maintenance

• License and registration

• Lease payments (subject to CRA limits)

• Interest on car loans

• Capital Cost Allowance (CCA) if you own the car

But remember — personal driving is not deductible. Only the percentage used for business applies.

3. Understanding CCA (Depreciation)

If you own the vehicle, you can’t deduct the full cost all at once. Instead, you claim CCA, which spreads out the cost over several years.

Most passenger vehicles fall under:

• Class 10 or 10.1 – standard cars

• Class 54 – zero-emission vehicles

The CRA sets annual CCA limits. For example, passenger vehicles generally have a maximum cost limit of $30,000 + tax eligible for CCA.

💡 Tip: You only claim CCA on the business-use portion of your car. For example, if your car is 60% business use, you can claim 60% of the CCA amount.

4. Pro-Rating Your Vehicle Expenses

Once you’ve figured out your business-use percentage, apply it across all vehicle expenses.

Example:

• Total gas, insurance, repairs, etc. = $6,000

• Business-use = 60%

✅ Claimable vehicle expenses = $6,000 × 60% = $3,600

Do the same calculation for CCA and any other vehicle-related costs.

5. Common Mistakes to Avoid

🚫 Estimating business use without a logbook
🚫 Claiming 100% of vehicle expenses when the car is also used personally
🚫 Forgetting to keep receipts or digital records
🚫 Double-claiming CCA and lease payments

CRA often audits vehicle expense claims — and your logbook is your best defense.

6. Keep It Clean and Simple

Maintaining your logbook, tracking receipts, and updating mileage may sound tedious — but it protects you at tax time and maximizes your deductions legally.

At Tiki Tax, we help small business owners set up easy logbook systems, calculate accurate CCA, and pro-rate expenses correctly — so you get every dollar you’re entitled to without CRA headaches.

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