Vehicle expenses for self-employed Canadians

1. The logbook is non-negotiable

CRA expects a contemporaneous mileage log to support every vehicle claim (administrative position in archived IT-521R, still applied). Columns: date, destination, purpose, kilometres, odometer start/end.

• Record the odometer on January 1 and December 31.
• Business-use % = business km ÷ total km for the year.
• Skipping the log commonly costs $2,000–$5,000 in lost deductions at moderate incomes.

2. What you can deduct

All operating costs are prorated by business-use %:

• Fuel and oil
• Insurance (commercial endorsement may be required)
• Licence and registration
• Maintenance and repairs — tires, brakes, oil changes
• Lease payments (subject to the $1,100/month 2025 ceiling)
• Loan interest (subject to the $300/month 2025 ceiling)
• Parking on business travel — 100%, not prorated
• Not deductible: traffic fines (s.67.6), commuting between home and a regular place of work

3. CCA — owning vs leasing

• Class 10 (30% declining balance): most passenger vehicles below the prescribed limit.
• Class 10.1 (30%): passenger vehicles above the prescribed capital cost limit ($38,000 for 2025). Each vehicle sits in its own class — no terminal loss permitted on disposal.
• Class 16 (40%): taxis and long-haul trucks (GVWR > 11,788 kg).
• Class 54 (100%): zero-emission passenger vehicles up to $61,000.
• Class 55 (100%): zero-emission non-passenger vehicles.
• Half-year rule: 50% of the CCA rate in the year of acquisition (waived for Class 54/55 phase-in).
• Immediate expensing for CCPCs: up to $1.5M of designated property per year (subject to the phase-out schedule).

Lease vs buy

4. Meals while travelling

• General rule: 50% deductible (s.67.1).
• Long-haul truck drivers (> 160 km from home terminal, > 24 hours, GVWR > 11,788 kg): 80% deductible.
• Simplified method: $23/meal flat rate (3 meals/day = $69/day for long-haul) — no receipts required, but must keep trip log.
• Detailed method: actual receipts, then apply the 50% or 80% factor.

5. Zero-emission vehicle incentives

• Class 54: 100% first-year CCA on ZEVs up to $61,000 + applicable sales tax.
• Federal iZEV rebate: up to $5,000 for qualifying new vehicles.
• Provincial incentives: Quebec up to $7,000; BC up to $4,000; other provinces vary.
• Combined: a $50,000 EV can generate $50,000 of CCA in year one plus $5,000–$12,000 in rebates.

6. Common mistakes

1. No logbook → deduction restricted or denied.
2. Claiming commute as business — home to a regular workplace is personal.
3. Exceeding lease or interest limits without adjustment.
4. Putting a Class 10.1 vehicle in the general Class 10 pool — no terminal loss permitted on 10.1.
5. No fuel receipts — credit-card statements work as backup but original receipts are stronger.

7. Worked example — Ontario consultant

$80k net income, personal vehicle 65% business use.

Tax saving at ~33% marginal ≈ $3,602.

Related calculators and guides

• CCA Classes Reference
• Business Expenses Guide
• Canadian Income Tax Calculator
• Home Office Guide