Vehicle & Mileage Expenses — Canada Tax Rules

Claim the business-use proportion of your vehicle costs using CRA's logbook method — or C$0.7/km/km for the first 5,000 km km, C$0.64/km/km after.

Claimable: Partially claimable · Tax authority: CRA (Canada Revenue Agency)

CRA (Canada Revenue Agency) Rules

• CRA's primary method is the actual costs method: track all vehicle expenses (fuel, insurance, repairs, oil changes, registration) and multiply by your business-use percentage.
• Business-use percentage = business km ÷ total km driven in the year.
• Employees and some self-employed individuals can use the CRA per-kilometre rate: C$0.7/km/km for the first 5,000 km km of business driving, and C$0.64/km/km thereafter.
• A mileage logbook is mandatory — record each business trip: date, destination, purpose, client name, and kilometres driven.
• Capital Cost Allowance (CCA) on the vehicle is also deductible — vehicles are Class 10 (30%/year) or Class 10.1 for vehicles over the prescribed limit.
• Commuting from home to a fixed office is personal travel — not deductible. Driving from home directly to client sites is business travel.
• If you use the per-km rate, you cannot also claim CCA or the actual cost of insurance and fuel.

Limits

Per-km rates (2024): C$0.7/km for the first 5,000 km km, C$0.64/km above. Actual costs method: only the business-use proportion is deductible. CCA Class 10 vehicles: 30%/year declining balance; Class 10.1 (luxury): limited to prescribed ceiling.

Worked Example

Liam drives 7,000 km for business in 2024 out of 14,000 total km (50% business). Using the per-km rate: first 5,000 km km × C$0.7/km = C$3,500, next 2,000 km × C$0.64/km = C$1,280. Total mileage claim: C$4,780. Alternatively, using actual costs: annual vehicle expenses C$9,200 × 50% = C$4,600 deductible, plus CCA.

Record Keeping

• Maintain a mileage logbook for every business trip — date, starting/ending odometer, destination, client, and purpose
• Record odometer reading on 1 January and 31 December each year to calculate total annual kilometres
• Keep all fuel receipts, insurance renewal documents, repair invoices, and registration stickers
• Retain vehicle purchase or lease agreement and keep a separate CCA schedule for the vehicle
• If using the per-km rate, still keep a logbook — CRA can request it to verify business km claimed

Frequently Asked Questions

Do I need a logbook to claim mileage in Canada?

Yes — CRA requires a mileage logbook to support any vehicle expense claim. The logbook must record each business trip: date, starting and ending odometer readings (or total km), destination address, client or business purpose, and the reason the trip was required. Without a logbook, CRA may disallow the entire vehicle claim in an audit.

What is the CRA mileage rate for 2024?

CRA's automobile allowance rates for 2024 are C$0.7/km per kilometre for the first 5,000 km km of business driving, and C$0.64/km per km for each kilometre above 5,000 km. These rates apply when using the simplified per-km method instead of tracking actual vehicle costs.

Can I claim my car lease payments as a self-employed Canadian?

Yes — if you lease a vehicle, you can deduct the business-use proportion of monthly lease payments (subject to a prescribed deductible limit per month for leased vehicles). You cannot also claim CCA on a leased vehicle. Track business km carefully, as you can only deduct the business-use percentage of lease costs.

Is driving from home to a client's office deductible in Canada?

Yes — if you are self-employed and your home is your principal place of business, driving from your home directly to a client's site is business travel and is deductible. This is different from an employee commuting to a fixed office, which CRA considers personal travel.