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Documenting the Use of a Vehicle

October 1, 2015 - 0

Many people are not fully aware of how to properly record the use of a vehicle for business purposes. Please read below and follow the links for helpful and important information. You may also want to ask your accountant about a travel log and the rules governing the use of a vehicle for business.

Important notice

Information on calculating taxable benefits for employer-provided vehicles is available under Automobile and motor vehicle benefits. Information on motor vehicle expense deductions for salaried employees is available under Allowable motor vehicle expenses.

This document explains the ways in which a person who uses a vehicle in a business can keep track of business travel.

When a vehicle is used partially for business purposes and partially for other purposes, the expenses relating to its use must be apportioned. Only those expenses relating to the business travel or commercial activity are considered eligible for a business deduction and for input tax credits on GST/HST. The proration in such cases is done based on the distances driven. To support a deduction or claim, the person must know and be able to demonstrate the distance travelled for business purposes and commercial activities.

The Income Tax Act and the Excise Tax Act do not set out specific documentary requirements for recording the usage of a vehicle. The general rule is that the person must retain records that would enable an objective determination of the person’s tax payable.

Full logbook

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.

Source of this information, and to read more follow: http://www.cra-arc.gc.ca/whtsnw/lgbk-eng.html

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