What happens if I use my vehicle for both personal and business use?

When a vehicle is used for both personal and business purposes, only the business-use portion of operating expenses and depreciation (CCA) can be deducted. The allocation is based on the ratio of business kilometres to total kilometres for the year — your mileage log is the foundational record for this calculation.

Commuting from home to your regular place of business is treated as personal, not business, use. Many self-employed people are surprised by this: trips to a regular office or studio are not deductible even if you discuss business on the way. Travel to client sites, job locations, or business meetings from your home or workplace generally qualifies as business use.

If you are provided a vehicle by your corporation (or if your corporation owns the vehicle you use personally), a taxable benefit must be reported on your personal return. This is a different situation from sole proprietors. For sole proprietors, there is no taxable benefit calculation — you simply limit deductions to the business fraction. Accurate record-keeping throughout the year is the best protection against a CRA challenge.