Now that MileIQ for Canada is live, it’s easier than ever to claim the mileage deduction you deserve. Be sure you’re aware of the CRA mileage log requirements before you claim motor vehicle expenses on your taxes.
What Does the CRA Want From Your Mileage Log?
The Canada Revenue Agency knows there’s a cost for using your personal vehicle for business purposes. To help offset this, it allows Canadians to take a deduction for their business mileage.
They don’t just take your word for it, though. While you don’t have to submit your mileage log during tax time, you will have to keep it if you ever face an audit by the CRA.
The agency said “the best evidence to support the use of a vehicle is an accurate logbook of business travel maintained for the entire year.”
What Should You Include In Your CRA Mileage Log?
The CRA said you must keep a record of the total kilometers you drive and the kilometers you drive for business purposes.
For said business trips, you must log:
- Date of the trip
- The destination
- The business purpose
- Number of kilometers you drive.
You should also record the odometer reading of your car at the beginning and end of the fiscal period.
What Happens If I Don’t Have A Car Log?
If you don’t have a car log for your business drives and claim the deduction, you could wind up facing stiff penalties and fines. Not only would your deduction not be allowed, the CRA could impose additional fines on top of your lost deduction.
That’s why it’s critical to have a full, compliant mileage log. Apps like MileIQ make it simple to keep a compliant log: just download the app, drive and then classify trips with one swipe.
One last tip: a major red flag for the CRA is those claiming 100% business use of a personal vehicle. No matter how much you use a personal vehicle for work, the chances of it being 100% are extremely low. Avoid this at all costs.