Getting ready to file your income tax return? If you used your personal vehicle to generate employment income, you might be eligible to deduct car expenses when you file your income tax.
Eligibility for Claiming Vehicle Expenses
According to the Canada Revenue Agency, you can deduct your motor vehicle expense if all of the following is true for you:
- You are required to do most of your work away from your place of employment, or in different places.
- Your contract of employment has you paying for your own vehicle expenses.
- You did not receive a non-taxable allowance to cover vehicle expenses.
- You kept a detailed mileage log that includes the date of trip, client visited, the reason for the trip, and mileage driven. You also have a Form T2200 which has been completed and signed by your employer.
What Vehicle Expenses Can I Claim?
If you met all of the above eligibility conditions, you will need to fill out A Statement for Employment Expenses (T777). With a detailed mileage log and vehicle-related receipts and bills, you may claim a portion of:
- Gas receipts
- Repair expenses, maintenance services, and car washes
- Highway toll charges
- License and registration fees
- Interest on car loans
- Lease costs
For the Record
Keeping and maintaining a vehicle mileage log will help you to determine work-related vehicle expenses and will be important if you get audited. Record your odometer reading at the beginning of the tax year, and at the end. You should also keep a running total of vehicle expenses and the receipts. Remember to subtract personal mileage and personal expenses from your total.