If you use a vehicle for business in Canada, you can deduct a portion of your vehicle expenses on your tax return. However, the CRA has strict requirements – particularly around the vehicle log book, which is mandatory for anyone claiming business vehicle deductions. Without a proper log, the CRA can deny your entire vehicle expense claim.
This guide covers everything you need to know about claiming vehicle expenses with the CRA in 2026: what to track, what you can deduct, CRA limits, and how to keep proper records.
The Vehicle Log Book: CRA’s #1 Requirement
The CRA requires a detailed log book for every vehicle used for business purposes. There are no exceptions. Your log book must record:
- Date of each trip
- Destination (client name or meeting location)
- Business purpose of the trip
- Number of kilometres driven
- Odometer reading at the start and end of each tax year
Your business-use percentage is calculated as: business kilometres ÷ total kilometres × 100. For example, if you drove 20,000 km total and 12,000 km were for business, your business-use percentage is 60%. You can then deduct 60% of your eligible vehicle expenses.
Simplified Log Book Method
After keeping a full log book for one complete 12-month base year, you can use the simplified method. This allows you to keep a log for just a three-month sample period in subsequent years, as long as your business-use percentage is within 10 percentage points of the base year. If it deviates, you must start a new base year.
Eligible Vehicle Expenses
| Expense | Deductible? | Notes |
|---|---|---|
| Fuel and oil | Yes | Based on business-use percentage |
| Insurance | Yes | Based on business-use percentage |
| Maintenance and repairs | Yes | Based on business-use percentage |
| Licence and registration | Yes | Based on business-use percentage |
| Lease payments | Yes | Subject to CRA monthly limit |
| Loan interest | Yes | Subject to CRA monthly limit |
| CCA (depreciation) | Yes | Subject to CRA cost ceiling |
| Parking (business) | Yes | Fully deductible (not prorated) |
| Tolls (business) | Yes | Fully deductible (not prorated) |
| Car washes | Yes | Based on business-use percentage |
| Traffic fines | No | Never deductible |
CRA Vehicle Expense Limits (2026)
The CRA sets annual limits on certain vehicle expenses. Check the CRA website for the most current figures, as these are updated annually:
- CCA cost ceiling – the maximum cost of a passenger vehicle eligible for CCA (Class 10 or 10.1)
- Monthly lease limit – the maximum deductible lease payment
- Monthly interest limit – the maximum deductible interest on a vehicle loan
- Per-kilometre allowance – for employers paying mileage to employees (not applicable to self-employed deducting actual expenses)
Receipt Requirements for Vehicle Expenses
Keep receipts for every vehicle-related expense:
- Gas station receipts (before they fade – thermal paper receipts are the worst)
- Mechanic invoices and repair bills
- Insurance policy and payment records
- Lease agreement and monthly statements
- Loan statements showing interest paid
- Parking receipts (for business parking only)
Scan fuel and parking receipts immediately – they are printed on thermal paper that fades within months. SparkReceipt’s AI receipt scanner captures the details in seconds. Use the mileage tracker to log your business trips alongside your receipts.
All vehicle records must be kept for at least six years. For the full picture of what the CRA requires, see CRA receipt requirements.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified Canadian tax professional for your specific situation.
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