Motor vehicle expenses

 

If you are an employee earning commission income, you can deduct expenses for your vehicle as long as you meet the conditions outlined for commission employees.

If you are an employee earning a salary, you can deduct expenses for your vehicle as long as you meet the conditions outlined for salaried employees.

Keeping records

Since you can deduct motor vehicle expenses only when they are reasonable and you have receipts to support them, keep a record for each vehicle you used. The record should include the total kilometres you drove as well as the kilometres you drove to earn employment income. The record for each trip you took to earn employment income should list the date, destination, purpose, and number of kilometres. Record the odometer reading of each vehicle at the beginning and again at the end of the year.

If you change motor vehicles during the year, record the odometer reading of each vehicle at the time you buy, sell, or trade it. Write down the dates as well.

Joint ownership

If you and somebody else own or lease the same passenger vehicle, the limits on capital cost allowance, interest, and leasing costs still apply. The total amount the joint owners can claim cannot be more than the amount that would be allowed if only one person had owned or leased the vehicle.

Employment use of a motor vehicle

If you use a motor vehicle for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount you can deduct, keep a record of both the total kilometres you drove and the kilometres you drove to earn employment income. We consider driving back and forth between home and work as personal use.

If you use more than one motor vehicle to earn employment income, calculate the expenses for each vehicle separately.

For more information about motor vehicle expenses, see Type of vehicle you own.

Completing your tax return

Enter on line 229, the allowable amount of your employment expenses from the total expenses line of Form T777, Statement of Employment Expenses.

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