How do I deduct vehicle expenses as a self-employed person in Ontario?

Self-employed individuals can deduct vehicle expenses to the extent the vehicle is used for business purposes. The deductible portion is based on the ratio of business kilometres driven to total kilometres driven during the year. You must maintain a mileage logbook throughout the year recording each business trip: date, destination, purpose, and kilometres.

Deductible vehicle costs include fuel, oil, insurance, licence and registration fees, maintenance and repairs, and CCA (depreciation). Leasing costs or interest on a vehicle loan are also deductible subject to specific federal limits on the amount per month. For purchased vehicles, only the cost up to a prescribed ceiling (set federally) is eligible for CCA, meaning expensive luxury vehicles have a capped deductible base.

The CRA pays close attention to vehicle expense claims because they are frequently overestimated or claimed without proper records. A contemporaneous logbook — maintained throughout the year, not reconstructed at tax time — is the most defensible record. Without it, the CRA can deny the deduction entirely.