CRA mileage rate: how to claim business vehicle use in Canada

When you drive for work, the CRA lets you turn kilometres into a deduction using a per-kilometre rate. The rate itself is easy. What trips people up is proving the kilometres were business ones — and that takes a log.

What the per-kilometre rate actually is

The CRA publishes a rate for each calendar year, split into a lower rate for the first stretch of kilometres and a higher one after that, plus a separate rate for the territories. You multiply the business kilometres you drove by the rate and that figure becomes your vehicle expense for the year.

The rate is not permanent. It is set for a given year and it changes. Before you file, confirm the current rate and how the tiers work for your filing year on the CRA's pages, or have your accountant confirm it. A spreadsheet you built three years ago may be using a rate that no longer applies.

Why the rate alone is not enough

A rate with no kilometres behind it is just a number. The CRA expects you to show how many of your total kilometres were for business and how you arrived at that split. That means a log — written as you go, not reconstructed at tax time from memory.

What a mileage log must contain

The purpose of the log is to let someone else see, for each trip, that it was a business trip. In practice a usable log records:

• The date of the trip
• Where you started and where you stopped
• The purpose — which client, which supplier, which job site
• The kilometres driven on that trip
• Your odometer reading at the start and end of the year
• Total kilometres for the year, so the business share can be calculated

A daily log is the standard the CRA describes. If you keep one for a full year and it shows a consistent pattern, many people keep a shorter sample log in later years and support it with the annual odometer totals. Confirm whether that is acceptable for your situation before relying on it.

The three mistakes that cost the claim

Mixing personal driving in without a split

The rate applies only to business kilometres. If you claim every kilometre you drove, including the school run and groceries, the whole claim looks unreliable. Keep the split honest and let the numbers speak.

Running without a log

"I drove about 20,000 km for work" is an estimate, and an estimate the CRA can set aside. No log usually means no deduction, not a smaller one. The fix is not to write it more confidently — it is to have the record.

Claiming a vehicle the business does not really use

If a car is used mostly for personal driving, listing it as a business vehicle draws attention to a claim that will not survive review. Claim the business share of the vehicles that actually do business work.

Keep the two streams separate

Mileage is an income-tax deduction. If your vehicle is used for a GST/HST-registered business, the tax on its business-share running costs can also be recoverable as an input tax credit. Those are two different calculations from the same kilometres, so enter the distances once and let the record serve both. Keep the log and your receipts for at least six years.

Start the log before you need it

The log is only worth something if it was written as the driving happened. A log rebuilt at the end of the year from a calendar and a bank statement is a guess dressed up as a record, and it is the first thing to fall apart in a review. Write the trip down the day you make it — its purpose, its start and stop, its kilometres — and the year-end total looks after itself.

Match the kilometres to the year

Your log has to line up with your vehicle's total kilometres for the same period. If the two do not agree, the discrepancy is what gets questioned, not the rate. Note your odometer reading on the first and last days of the year so the business share you calculate has a denominator you can point to.