Calculating motor vehicle expenses
If you use a motor vehicle or a passenger 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.
You can deduct the full amount of parking fees related to your business activities and supplementary business insurance for your motor vehicle or passenger vehicle.
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
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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