Claiming vehicle expenses as a self-employed person in Canada

If you use your own vehicle for your business, you can deduct the business part of what it costs to run. The whole claim rests on one number — the share of your driving that was for business — and that number rests on one document: your logbook. Get the logbook right and the rest is arithmetic.

What you can claim

The CRA lets self-employed people deduct the costs of running a vehicle used to earn business income (CRA, motor vehicle expenses):

• Licence and registration fees
• Fuel and oil, or electricity for a zero-emission vehicle
• Insurance
• Interest on money borrowed to buy the vehicle
• Maintenance and repairs
• Leasing costs

You can also claim capital cost allowance (CCA) — tax depreciation — on a vehicle you own. That is claimed separately from the running costs. Capital cost allowance explained covers how CCA works across all your assets.

The business-use percentage

You can only deduct the part of the costs that relates to business driving. The CRA's formula (same page):

Business kilometres ÷ total kilometres × total vehicle expenses = deductible amount

The CRA's own example: 27,000 business km out of 30,000 total, with $7,000 of expenses.

• 27,000 ÷ 30,000 = 90%
• 90% × $7,000 = $6,300 deductible

A more typical small-business example: 12,000 business km out of 20,000 total, and $9,500 of fuel, insurance, repairs and registration.

• 12,000 ÷ 20,000 = 60%
• 60% × $9,500 = $5,700 deductible

The other $3,800 is personal, and it stays personal however the vehicle is paid for. To run your own numbers, use the vehicle expense calculator.

Is driving to work business driving?

Usually not. The CRA's long-standing position is that travel between your home and your place of business is personal, unless your home is the base of your business operations. If you have an office, shop or other fixed place of business elsewhere, your home is normally not that base (CRA, archived IT-521R).

The same bulletin says that if you do your administrative work at home and have no office anywhere else, your home can be your base — and then trips from home to clients and job sites are business trips.

In practice:

• Home to your shop or office every morning: personal.
• Shop to a client, a supplier or a job site: business.
• Home-based business, home to a client: business.

The logbook

For each business trip, the CRA expects a log of (CRA, motor vehicle records):

• The date
• The destination
• The purpose
• The number of kilometres

You also record the odometer reading at the start and end of your fiscal year, so you have total kilometres to divide by. A spreadsheet works, a mileage app works, a notebook in the glovebox works. Reconstructing it from memory in April does not work well.

The simplified logbook

Keeping a log every day forever is tedious, so the CRA allows a shortcut (same page):

1. Keep a full logbook for one complete year. That is your base year.
2. In later years, keep a log for a three-month sample period.
3. If the sample is within 10% of the same period in the base year, you can use it to work out the year:

(sample period % ÷ base year same period %) × base year annual % = this year's business use

The CRA's example: the base year averaged 49% business use, with 46% in April to June. This year's April-to-June sample shows 51%.

• 51% ÷ 46% × 49% = 54% business use for the year

If your driving changes enough that the result moves by more than 10%, the base year no longer represents your use and you need a new full-year log. Keep the base-year logbook for six years from the end of the last tax year you rely on it for (same page).

The 2026 limits for passenger vehicles

Ordinary cars, SUVs and light trucks used mostly to carry people are "passenger vehicles", and the government caps what you can deduct on them. For 2026 (Department of Finance, 2026 automobile limits):

• CCA ceiling: $39,000 before tax, for passenger vehicles (new or used) acquired on or after January 1, 2026 — up from $38,000
• Zero-emission passenger vehicles: $61,000 before tax
• Leasing: $1,100 a month before tax, for new leases
• Loan interest: $350 a month, for new loans

So if you buy a $55,000 SUV, CCA is worked out on $39,000, not $55,000. Whether a pickup or van is a passenger vehicle at all depends on its seating and how it is used — check the CRA's vehicle definitions with your accountant before you assume.

If you are registered for GST/HST, the input tax credit on a passenger vehicle is restricted too: you can't claim an ITC on the part of the purchase price over the ceiling (CRA, ITC eligibility percentage).

If you are incorporated

The rules above are for sole proprietors, who claim vehicle expenses on Form T2125. If you own a corporation and drive your own car for it, a common approach is for the company to pay you a per-kilometre allowance for business kilometres. For 2026 the reasonable-allowance rates are 73 cents a km for the first 5,000 km and 67 cents after that in the provinces (Department of Finance). You still need the logbook to support the kilometres.

If the corporation owns the vehicle and you drive it personally, the CRA treats that personal driving as a taxable benefit — and its benefit rules cover shareholders as well as employees (CRA, automobile and motor vehicle benefits). That is a conversation for your accountant before you buy, not after.

How to keep it straight in your books

• Give vehicle costs their own accounts — fuel, insurance, repairs, lease or loan interest — so the year-end percentage can be applied cleanly. See chart of accounts for a small business.
• Book the full cost during the year and apply the business-use percentage at year end from the logbook, rather than guessing a split on every fill-up.
• Keep fuel receipts with the GST/HST shown if you are registered.
• Don't run family vehicles through the business "because it's easier". The personal use comes back out at year end anyway.

Spark Books sorts gas station, insurance and repair-shop charges from your uploaded bank and card statements into the right vehicle accounts with the GST/HST split, and matches receipts to them. Its year-end package is mapped to the T2125 lines, which is where your accountant applies the business-use percentage from your logbook.

The short version

• Deduct the business share of fuel, insurance, repairs, registration, lease costs and loan interest, plus CCA.
• The share is business km ÷ total km, from a logbook.
• Home to your regular place of business is personal driving.
• After one full year, a three-month sample log is allowed if your driving stays within 10%.
• 2026 limits: $39,000 CCA ceiling, $1,100/month leasing, $350/month interest.

Free bookkeeping that already knows a gas station from a grocery store: Spark Books — upload your statements and it does the sorting. No card needed.