Calculating motor vehicle expenses

If you use a motor vehicle for business and personal use, you can deduct only the part of the expenses that you paid to earn income. To support the amount you can deduct, keep a record of the total kilometres you drive and the kilometres you drive to earn income.

Note

You can deduct the full amount of parking fees related to your business activities and supplementary business insurance for your motor vehicle.

Example

Danielle owns a hardware store that has a December 31 year-end. She has a van that she uses for the business.

Danielle noted the following for the tax year:

Kilometres driven to earn business income: 27,000 
Total kilometres driven: 30,000 

Expenses:
Licence and registration fees = $100 
Gas and oil = $2,400 
Insurance = $1,900 
Interest = $800 
Maintenance and repairs = $200 

Total expenses for the van = $5,400 

Danielle calculates the expenses she can deduct for her van for the tax year as follows:

(27,000 business kilometres ÷ 30,000 total kilometres) × $5,400 = $4,860 

The deductible business part of Danielle's van expenses is $4,860.

She also has business parking fees of $40 and a supplementary business insurance cost of $100. Therefore, she can claim $5,000.

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