Motor vehicle expenses

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Motor vehicle expenses

If you use your vehicle occasionally for business purposes, you might benefit from claiming motor vehicle expenses on a per-trip basis. For example, taking the children to a park or on an excursion may involve expenses for fuel and parking. These are all the business expenses that you can claim.

However, if you use your vehicle regularly for business and personal trips, you can claim part of the total operating expenses for this vehicle as a business expense.

You must keep accurate records that show the part of the total kilometres that were driven to earn business income. If you change vehicles during the year, record the mileage for each vehicle when you start and stop using it.

For more information on motor vehicle records, go to Keeping daycare records.

Motor vehicle operating expenses include:

  • licence and registration fees;
  • insurance;
  • gas and oil;
  • maintenance and repairs;
  • the interest you pay on a loan to buy a vehicle; and
  • leasing costs.

Do not include capital cost allowance (CCA) in your operating expenses. Instead, claim any CCA on line 9936 of Form T2125, Statement of Business or Professional Activities. For more information about CCA, go to Capital cost allowance (CCA) for your daycare.

Note

There is a limit to the amount of CCA, motor vehicle interest, and motor vehicle leasing costs that you can deduct for the vehicle that you use for your daycare. We explain these limits under "Motor vehicle expenses" in Chapter 3 of Guide T4002, Business and Professional Income.

Calculating motor vehicle expenses

To calculate the vehicle expenses you can claim, multiply the total operating expenses for the vehicle by the business kilometres, and divide the result by the total kilometres.

Example

Kayla runs a daycare in her home. Every week, she uses her van to take the children out to a museum or a gallery. In the year, she drove a total of 20,000 kilometres. Out of those, she drove 2,500 kilometres for the outings with the children. The operating expenses for Kayla’s van were $3,700.

$3,700 in operating expenses × (2,500 km ÷ 20,000 km) = $462.50

Kayla can deduct $462.50 for the business part of her vehicle expenses.

For more information on reporting motor vehicle expenses, go to line 9281 of Form T2125.

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Date modified:
2016-03-18