Vehicle Expenses: Logbooks, CCA, and Pro-Rating

If you use your vehicle for both business and personal purposes, you can claim part of your car expenses on your tax return. But the Canada Revenue Agency (CRA) requires that you only deduct the business-use portion — and that you can prove it with a logbook.

Let’s break down how vehicle expense claims really work, and how to stay compliant while maximizing your deductions.

1. The Logbook: Your Proof of Business Use

Your logbook is your best friend when claiming vehicle expenses. CRA expects you to track your business vs. personal mileage throughout the year.

Each trip in your logbook should include:

• The date of the trip

• The destination

• The purpose of the trip

• The kilometres driven

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

Business km ÷ Total km = Business-use %

💡 Tip: Keep a full-year logbook for your first year. In future years, CRA lets you use a 3-month sample logbook to estimate business use, as long as your driving habits remain similar.

2. Eligible Vehicle Expenses

You can claim the business portion of most vehicle costs, such as:

• Fuel and oil

• Insurance

• Repairs and maintenance

• License and registration

• Car washes

• Lease payments (within CRA limits)

• Interest on car loans

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

Example:
If your total vehicle costs are $6,000 and 60% of your driving is for business, you can claim $3,600 ($6,000 × 60%).

3. Claiming CCA (Depreciation) on Your Vehicle

If you own your vehicle, you can’t deduct the full cost right away. Instead, CRA allows you to claim CCA, which spreads the deduction over several years.

Most vehicles fall under these CRA classes:

• Class 10 or 10.1 – standard passenger vehicles

• Class 54 – zero-emission vehicles

CCA rates typically allow you to deduct 30% per year (on a declining balance basis).

Example:
If your car cost $30,000 and you use it 60% for business:

• Business-use cost = $30,000 × 60% = $18,000

• CCA for the first year (half-year rule) = $18,000 × 15% = $2,700

💡 Remember: you can only claim CCA on the business-use portion of your car.

4. How to Pro-Rate Your Vehicle Expenses

Pro-rating means applying your business-use percentage to each type of expense.

Let’s say you drove 25,000 km total this year — 15,000 km were for business.

Business-use = 15,000 ÷ 25,000 = 60%

You’d then claim 60% of all vehicle-related costs, including:

• Gas

• Insurance

• Repairs

• CCA or lease payments

This ensures you only deduct the business-related portion as required by CRA.

5. Common CRA Mistakes to Avoid

🚫 Claiming 100% of your vehicle expenses when you also use it personally.
🚫 Forgetting to keep a mileage log or receipts.
🚫 Double-claiming both lease and CCA (only one applies).
🚫 Using unrealistic business-use estimates.

CRA audits vehicle expense claims often — and your logbook is the first thing they’ll ask for.

6. Keep It Organized, Stay Protected

Tracking your mileage, keeping receipts, and calculating your business-use percentage might seem tedious — but it’s worth it. You’ll maximize your deductions and stay safe if CRA ever reviews your return.

At Tiki Tax, we help business owners and self-employed professionals set up logbook systems, calculate fair pro-rates, and apply CCA properly — so you can claim every dollar you’re entitled to, stress-free.