The Vehicle Logbook You Start on January 1

What the CRA Actually Asks For

The CRA's own guidance names the best evidence for a vehicle claim: an accurate logbook of business travel, kept for the entire year. For each business trip it asks for four things: the date, the destination, the purpose, and the kilometres driven.

Two more readings hold the year together: the odometer at the start of the year and at the end. Those give your total kilometres, the bottom half of the percentage. If you buy, sell or trade the vehicle partway through, record the date and the odometer reading at the change as well.

That's the whole list. The CRA asks for what the log records, not for a particular notebook or app. A paper log in the door pocket works, and so does a spreadsheet or a phone app, as long as every business trip gets its purpose and not just its distance.

What a Usable Entry Looks Like

A few lines from a contractor's January, start to finish:

Look at the purpose on each line: the job, not just "work". "Business" written on every trip tells a reviewer nothing about why the trip was business, and a purpose is one of the four things the CRA asks for.

And look at what isn't there: the drive from home to the shop that morning. If you work out of a fixed shop, that drive is commuting, and the CRA treats driving between home and work as personal use. Our tax guide for trades and contractors covers where the line falls when you go straight from home to changing job sites.

From Kilometres to a Deduction

At year-end the log gives you two numbers. Business kilometres come from adding up the trips. Total kilometres come from the two odometer readings. One over the other is your business-use percentage, and it applies to the vehicle's costs for the year: fuel, insurance, maintenance and repairs, licence and registration, and the interest or lease payments on the vehicle itself.

Take the log above through to December. The odometer moved from 84,200 to 116,200, so 32,000 kilometres in total. The business trips add up to 21,600. That's 67.5% business use, and on $14,000 of vehicle costs it's a $9,450 deduction.

Without the log, it's the same truck, the same driving and the same receipts, but the claim is limited to whatever percentage you can prove some other way. That's usually less.

The Shortcut, After One Full Year

The CRA allows a lighter log once you've kept a full one. Keep a complete logbook for one full 12-month year, your base year, and in later years you can keep the log for a three-month sample period and use it to work out the whole year.

The arithmetic compares the same three months in both years: this year's sample-period percentage, divided by the same months' percentage in the base year, multiplied by the base year's annual percentage.

The CRA's own example: a base-year log shows 49% business use over the year, and 46% across April, May and June. In a later year, a log kept for April to June shows 51%. That works out as (51 ÷ 46) × 49 = 54%, and the CRA says it would accept 54% for that year, in the absence of contradictory evidence.

The limit is 10 percentage points either side of the base year. With a 49% base year, the calculated figure has to land between 39% and 59%. If it doesn't, the base year no longer describes how you use the vehicle: the sample log only supports its own three months, the rest of the year needs an actual record of travel, and the sensible move is to start a new 12-month base year.

Two practical consequences. The CRA expects you to be able to show the base year still reflects normal use, so a change of trade, a new shop or a different kind of work is a good reason to keep a fresh full year. And the base-year logbook has to be kept for six years after the last year it's used to work out business use, which can be well beyond the year it was written.

One caution for employees: the CRA sets out the sample-period method on its pages for businesses. Its guidance for employees claiming vehicle expenses asks for a record of total and employment kilometres for the year, so check with us before relying on a sample period on a T777.

If You Never Kept One

There's no rule that a missing log turns a vehicle claim into zero. But it's on you to support the percentage you claim, and the CRA has said plainly what the best evidence is. Without a log, the claim rests on whatever else exists: invoices and calendars that show where you were working, fuel receipts, and service invoices that record the odometer. Those can support some business use. They rarely support a high percentage, and a round-number estimate is exactly the kind of figure that gets cut back when a claim is reviewed.

What not to do is write a log now for a year that's already over and present it as if it had been kept at the time. Rebuilding a year from your invoices and calendar can be a reasonable way to organize the evidence you have, as long as it's called what it is. Presented as a record kept at the time, it stops being weak evidence and becomes a false one.

So for a year without a log, gather what's there and claim what it supports. Then start the log on January 1, so it only happens once.

Which Claim Is Yours

Self-employed: the vehicle claim goes on your T2125 with the rest of your business expenses. Our self-employed tax guide covers the rest of that form.

Employed, driving your own vehicle for work: the same log applies, and the claim also needs a T2200 signed by your employer. Without the form there's no claim, however good the log is.

Employed, driving your employer's vehicle: the log matters the other way round. It's your personal kilometres that set the taxable benefit on your T4, and the reduced standby charge depends on them. Our company car taxable benefit guide works through how.