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Automotive Expenses

One of the most regularly audited expenses by CRA are automotive expenses. As a business owner you need to be careful when reporting these amounts on your tax return. A big red flag for CRA is claiming 100% of your personal vehicle expenses as a business expense. I have had a potential client come to me where they were audited by CRA and then their amounts were adjusted due to lack of documentation. As well, if you are using a company owned vehicle for personal reasons you will be subject to receiving a taxable benefit and it will be included on your T4.

The key to claiming auto expenses is maintaining a log of your kilometers traveled for business purposes and the total kilometers driven throughout the year. In the log you need to track the dates along with where you went and what was the reason for the trip. You can log these kilometers via spreadsheets, or you can use an application such as MileIQ to track your miles. This application on your phone is easy to use as it knows when you are driving. All you then have to do is categorize the trip via a simple swipe to the left or right.

You can claim the business portion of expenses such as fuel, repairs and maintenance, CAA membership, license, parking and insurance. As well, you can claim lease expenses or amortize the cost of your personal vehicle. Please be aware that there are limits to these expenses.

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