Advice On Vehicle Expenses for Small Business Owners

Advice On Vehicle Expenses for Small Business Owners

For those who own a small business and use their vehicle for both personal and business purposes, claiming car expenses during income tax time can be very confusing.

 

The list of allowable vehicle expenses for small business owners includes:

  • license and registration fees
  • fuel and oil costs, leasing costs
  • insurance
  • maintenance and repairs
  • interest on money borrowed to buy a motor vehicle.

 

 

Claiming expenses on your vehicle is much easier when your car is used solely for business purposes. But if you’re using your car for personal reasons as well, tread carefully, as you can only deduct the amount of expenses used on your vehicle if it’s related to earning income.

 

It’s best to create an organized log of the amount you spend on the above vehicle expenses for your small business. Tracking the amounts in an excel spreadsheet from week to week, makes everything easier during income tax season.

 

Canada Revenue Agency (CRA) also recommends using the logbook method: “The best evidence to support the use of a vehicle is an accurate logbook of business travel maintained for the entire year, showing for each business trip, the destination, the reason for the trip and the distance covered.”

 

The CRA has a simplified way you can keep your motor vehicle records organized here.

 

It’s also imperative that you keep your receipts handy if you want to claim any vehicle expense. Get in a good habit of logging your spending using a logbook and this will make claiming vehicle expenses easier during each tax year.

 

 

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