So, You’re Self-Employed in Canada?  How do you get your Mileage Money?  Here’s the 411.

You must use the expense method.  What vehicle expenses can you deduct? (Hint: it’s more than just gas)

1. First, you must keep a record of all your vehicle expenses for the year.

What expenses you ask?

Here’s the list:

1. Gas receipts
2. Electricity for electric vehicles
3. Repairs/Maintenance costs
4. Insurance
5. Licensing Fees
6. Interest on money borrowed to buy a vehicle (there is a limit on this amount. For 2025, it is either the lesser of:

1. The total interest payable for the year OR
2. The max of $8.33/day for vehicles bought before Jan 1, 2001 OR 
3. The max of $10/day for vehicles purchased after Jan 1, 2001.
4. Your vehicle leasing costs (if leased and not owned) for the days of the year you leased your vehicle and used it for business purposes.  So, if you started leasing in January 2024 and started your business on May 1, 2024, you can only start deducting lease payments from May onward.  There is a limit on this deduction as well.  For new leases entered into on or after Jan 1, 2024, the max/mo wil be $1050.  Previously, that was $950.  Check with your tax preparer regarding your lease.
5.  SECOND,  you must keep a log (that’s where we come in at Mileage Trakker!) which details all of your trips—business and personal and provides your % of Business kms for the year.  Your log must have date, starting location, ending location, starting and ending odometer readings, no of kms, what business the trip was for and the purpose of the trip for EVERY business trip you take. (Aren’t you glad we do that part?  It’s 80 hrs of work if you do it yourself!)

You, then multiply your business percentage X your total vehicle expenses.  These are your operating costs for the year.

3. THIRD,  you are entitled to a Capital Cost Allowance as well. (this accounts for the depreciation of your vehicle).  This is a complicated formula based off of the purchase price of your vehicle (and there is a limit on the maximum purchase price you can use) and the year that your purchased it.  For vehicles purchase on or after Jan 1, 2024 the maximum purchase price you can use is $37,000 before taxes (the year before it was $36,000) regardless if you paid more than that for your vehicle.
4. FOURTH  You add your operating costs to your capital cost allowance and this becomes your total mileage deduction for the year.

Be sure to check your accountant/tax preparer has deducted both your operating costs and your capital cost allowance so you get your maximum deduction.  

In addition to your mileage deduction you can also expense any tolls and parking fees you had while doing business.

If you are a Mileage Trakker client, you can deduct the cost of our service as well.  

Two more deductions related to driving for business  for even more tax savings!