How to Keep a CRA Mileage Log for Vehicle Expenses in Canada

Vehicle expenses are one of the most commonly claimed – and most commonly audited – deductions for Canadian business owners and self-employed individuals. The Canada Revenue Agency (CRA) requires detailed records to support any vehicle expense claim, and a proper mileage log is the foundation of those records.

This guide explains exactly what a CRA-compliant mileage log looks like, how to calculate your vehicle deduction, what methods are available, and the best tools to make tracking easy.

At BOMCAS Canada, we help Alberta business owners and self-employed individuals maximize their vehicle deductions while staying audit-proof. Here’s everything you need to know.

Why the CRA Cares So Much About Mileage Logs

Vehicle expenses are a significant deduction – and a significant source of abuse. The CRA knows that many people claim personal vehicle use as a business expense, which is why vehicle expenses are one of the top items reviewed in small business audits.

Without a mileage log, the CRA can deny your entire vehicle deduction. With a proper log, you have the documentation to support every kilometre you claim. The difference can be thousands of dollars.

What Is a CRA Mileage Log?

A mileage log (also called a vehicle log or trip log) is a record of every business trip you make in your vehicle. For each trip, you record specific details that allow the CRA to verify the business purpose and distance.

What Every Trip Entry Must Include

The CRA requires the following information for each business trip:

1. Date of the trip
2. Destination (city or address you travelled to)
3. Business purpose (what the trip was for)
4. Odometer reading at the start and end of the trip
5. Distance travelled (in kilometres)

You also need to record your total annual kilometres driven (for all purposes, not just business) to calculate your business-use percentage.

The Two Methods for Claiming Vehicle Expenses

Method 1: Detailed Method (Actual Expenses)

The detailed method requires you to track all your actual vehicle expenses for the year and then multiply by your business-use percentage.

Step 1: Calculate your business-use percentage

Business-use % = Business kilometres ÷ Total kilometres × 100

Example:

• Total kilometres driven in the year: 25,000 km
• Business kilometres (documented in your log): 15,000 km
• Business-use percentage: 15,000 ÷ 25,000 = 60%

Step 2: Total your actual vehicle expenses

Eligible vehicle expenses include:

• Fuel and oil
• Insurance
• Maintenance and repairs
• License and registration
• Lease payments (subject to limits)
• Capital Cost Allowance (if you own the vehicle, subject to limits)
• Car washes
• Parking (for business purposes)
• Interest on vehicle loan (subject to limits)

Step 3: Apply your business-use percentage

If your total vehicle expenses were $12,000 and your business-use percentage is 60%:
Deductible amount = $12,000 × 60% = $7,200

Method 2: Simplified Logbook (After One Full Year)

If you’ve kept a full logbook for one complete 12-month period and your business use has been consistent, the CRA allows you to use a simplified logbook in subsequent years. Instead of recording every trip, you record trips for a sample period of at least three consecutive months and use that to extrapolate your annual business-use percentage.

Requirements for simplified logbook:

• You must have established a “base year” with a full logbook
• Your business use must be consistent with the base year (within 10%)
• You must record total annual kilometres driven
• You cannot use the simplified method in your first year

CCA Limits for Business Vehicles

If you own your vehicle (as opposed to leasing), you claim Capital Cost Allowance (CCA) as a deduction. However, the CRA caps the cost for CCA purposes:

Class 10 vs. 10.1: If your vehicle cost more than the $37,000 limit, it falls into Class 10.1, which has restricted CCA and no terminal loss on disposition. Vehicles costing $37,000 or less (or vehicles used primarily for business like pickup trucks used for a business) generally go into Class 10.

This is one area where getting the classification right at the time of purchase makes a significant difference. Our Edmonton accounting team can advise on the optimal structure when you’re buying a business vehicle.

Interest Deduction Limits on Vehicle Loans

If you borrowed money to purchase a passenger vehicle, the interest deduction is limited to $300 per 30-day period (approximately $3,650 per year), prorated by your business-use percentage.

Lease Payment Deduction Limits

For leased passenger vehicles, the monthly deduction is limited to the lesser of:

• Your actual monthly lease payment, or
• $950 per month (2025 limit)

Multiplied by your business-use percentage.

What Counts as Business Travel?

This is where many people get confused. Not every drive to a business-related destination is a deductible business trip.

Deductible Business Travel:

• Driving to meet clients or customers
• Driving to a job site (if you don’t have a fixed work location)
• Driving to suppliers or vendors
• Driving to a bank for business purposes
• Driving to a business-related course or seminar

NOT Deductible (Personal Travel):

• Commuting from home to your regular workplace (this is personal travel, not business travel – even if your employer is in a different city)
• Personal errands run during a business trip
• Driving to lunch (unless it’s a documented business meal with clients)
• Vacations that include some business activity (the personal portion is not deductible)

Important for home-based businesses: If your home is your principal place of business, trips from home to see clients are deductible because your home is your base of operations.

How Long to Keep Your Mileage Log

The CRA requires you to keep your mileage log and all supporting vehicle expense receipts for six years from the end of the tax year to which they relate. This means if you’re audited in 2025 for your 2019 return, you need records going back to 2019.

Keep your logs in a format that’s easy to retrieve – digital is fine, paper is fine, as long as it’s accessible.

Best Tools for Tracking Business Mileage in Canada

Gone are the days of the paper log in the glove box (though those still work). Here are the best options:

1. MileIQ (Canada)

Automatically tracks every drive using your phone’s GPS and lets you swipe to classify each trip as business or personal. Generates CRA-compliant reports. Subscription-based but the time savings are significant for high-mileage business owners.

2. TripLog

Similar to MileIQ but with more features for small business fleets. Generates detailed reports that match CRA requirements.

3. QuickBooks Self-Employed

If you’re already using QuickBooks, the mileage tracking feature is built in and integrates directly with your expense tracking.

4. Google Sheets / Excel Template

For the DIY approach, a simple spreadsheet works perfectly. Column headers: Date | Start Odometer | End Odometer | Kilometres | Destination | Business Purpose.

5. Paper Logbook

Old fashioned but 100% CRA-compliant. Available at any office supply store. Keep it in your vehicle and fill it in immediately after each trip.

BOMCAS tip: Whatever method you use, the key is logging trips in real time – not reconstructing them from memory at year end. The CRA looks for consistent, detailed records, not perfectly recalled summaries.

What Happens If You Don’t Have a Log?

If the CRA audits your vehicle expenses and you can’t produce a mileage log, they have the authority to:

1. Disallow your entire vehicle expense claim
2. Assess taxes on the disallowed amount plus interest
3. Potentially add a late-filing or negligence penalty

In some cases, the CRA may accept other evidence of business travel (appointment books, invoices, client contracts), but a contemporaneous mileage log is by far the strongest documentation.

We’ve helped many Alberta business owners through CRA vehicle expense reviews. The outcome is almost always better when there’s a log – even an imperfect one – than no documentation at all.

Special Situations

Company-Owned Vehicles and Employee Taxable Benefits

If your corporation owns a vehicle that you (as an owner-employee) use personally, there are two potential taxable benefits:

1. Standby charge: A benefit calculated on the cost of the vehicle, assessed when the vehicle is available for personal use
2. Operating cost benefit: A benefit based on personal kilometres driven

These benefits add to your personal taxable income. The calculations are complex, and with proper planning (including careful tracking of personal vs. business use), the taxable benefit can be minimized.

Our Edmonton corporate tax team helps Alberta business owners structure their vehicle arrangements to minimize these benefits.

Multiple Vehicles

If you use multiple vehicles for business, you need a separate log for each vehicle.

Electric Vehicles

The rules for EVs are generally the same as for conventional vehicles, but the Class 54 designation for zero-emission vehicles has a higher CCA cost cap ($61,000) and faster CCA rates. There may also be provincial incentives available for EV purchases for business use.

Mileage Log Template

Here’s a simple template you can copy into a spreadsheet or print:

At year end, also record:

• Total odometer at January 1: _______ km
• Total odometer at December 31: _______ km
• Total annual kilometres: _______ km
• Total business kilometres: _______ km
• Business-use percentage: _______ %

Summary

Keeping a proper CRA mileage log doesn’t have to be complicated. The key points:

• Record every business trip with date, destination, business purpose, and kilometres
• Track your total annual kilometres to calculate your business-use percentage
• Keep records for 6 years
• Use an app to make it effortless
• If you’ve had one full year of detailed logs, you may qualify for the simplified method

If you’re unsure whether your vehicle deductions are set up correctly, or if you’ve received a CRA letter about vehicle expenses, BOMCAS Canada can help. Our Edmonton accounting team works with self-employed individuals and small business owners across Alberta to maximize legitimate deductions and protect them in case of audit.

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