Business -> Automobiles, Passenger Vehicles and Motor Vehicles -> Vehicle trip log - Business use vs personal use of vehicles
A separate log should be kept for each vehicle which is driven for both business and personal use. For the self-employed, only the business portion of vehicle expenses can be deducted from income, and GST/HST input tax credits are only allowed related to the business use of a vehicle. For businesses which provide vehicles to employees, trip logs substantiate the business use of a vehicle, and the business must calculate the taxable benefit to employees based on the personal use.
The log should record the date of each business trip, destination, reason for the trip, and the kilometres driven. The odometer reading of the vehicle must also be recorded, at the beginning and end of each year, to determine the total kilometres driven in the fiscal period.
If you buy, sell or trade your vehicle during the year, be sure to record the odometer reading at that time.
Starting in 2010, once a taxpayer has maintained a trip log covering a full 12-month period that is typical for the business (the "base year"), Canada Revenue Agency (CRA) has indicated they would "afford considerable weight" to a trip log maintained for a "sample period" as evidence of the business use for a full year, if it meets the following criteria:
The base year business use will be used in subsequent years, along with the business use from the 3 month sample period, to determine the business use for the entire subsequent year. See the CRA article Documenting the use of a vehicle for more detailed information, and for an example of the formula used to calculate business use in subsequent years.
In Quebec, as per Revenu Quebec's Keeping Business Records information, supporting documents that must be retained regarding automobile mileage include:
Quebec's Logbook article also discusses the use of a simplified logbook for individuals in business.
If an employee travels between home and work, the travel is normally considered personal use of the vehicle, unless there was a business matter attended to between the home and the place of work.
If an employee travels between (i.e., to and/or from) home and a customer's place of work, the travel is normally considered business use.
For more information, see the CRA Interpretation Bulletin IT522 - Vehicle, Travel and Sales Expenses of Employees (Archived).
In Quebec, as per Revenu Quebec's Logbook information, an employee who makes use of an employer's automobile must keep a detailed logbook of the trips made with the automobile, and provide the employer a copy of the logbook no later than:
If a self-employed person has a home office and another office or place of business, usually the office outside the home is considered the base of business. Travel between the home office and the base of business will normally be considered personal use of the vehicle.
Driving between (i.e., to and/or from) different premises of the same business would usually be considered business use.
Driving between the home office of a self-employed person and a customer's place of work is considered business use, as is any other travel incurred for business purposes.
All topics related to vehicles and business
CRA ResourcesIT521 - Motor Vehicle Expenses Claimed by Self-Employed Individuals (Archived)
Tax Tip: To avoid problems with your vehicle expense claims, keep a trip log!
Revised: September 19, 2017
Copyright © 2002 - 2017 Boat Harbour Investments Ltd. All Rights Reserved See Reproduction of information from TaxTips.ca