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Canada Vehicle Expenses Guide

the vehicle expenses in Canada. The taxpayer who uses the vehicle for the business or the employment can deduct the vehicle expenses. The business-use percentage is calculated as the business kilometers divided by the total kilometers driven in the year. The CRA requires the "kilometer log" (the detailed record of each trip — the date, the destination, the purpose, the business kilometers, the personal kilometers). The deductible vehicle expenses include the fuel, the insurance, the maintenance and the repairs, the tire replacement, the washing and the detailing, the parking and the tolls (the "parking fees" — the parking for the business trips), the lease payments, the interest on the vehicle loan, and the CCA on the vehicle. The CCA on the passenger vehicle — the Class 10 (30% declining balance) with the capital cost limit (approximately $35,000 for the CCA purposes). The vehicle costing $50,000 is limited to the CCA on the first $35,000 (the "CCA limit" — the "maximum capital cost for the CCA purposes"). The leasing limit — the deductible lease payment is limited to the "prescribed monthly limit" (approximately $800 per month before the tax). The interest deduction — the interest on the vehicle loan is deductible up to the prescribed limit (approximately $300 per month for the passenger vehicles). The employer-provided vehicle — the "standby charge" (the taxable benefit for the personal use of the employer's vehicle) and the "operating expense benefit" (the $0.30 per km for the personal use of the employer-provided vehicle). The CRA automobile allowance rate — the tax-free allowance that the employer can pay to the employee for the business use of the personal vehicle ($0.70 per km for the first 5,000 km and $0.63 per km for the km above 5,000).

Kilometer Log Requirements

• Detailed log: The CRA requires the "detailed kilometer log" for each trip — the date, the starting location, the destination, the purpose (the "business purpose" — the client meeting, the supply pickup, the business travel), and the kilometers driven.
• Sample log: The CRA accepts the "sample log" (the "representative period" — the 3-month log) if the taxpayer can demonstrate that the sample is representative of the annual use. The sample log must be supported by the "business-use pattern" evidence.
• Business-use percentage: The total business kilometers divided by the total kilometers in the year. The percentage is applied to the total vehicle expenses to calculate the deductible amount.

Deductible Expenses

• Fuel: The gasoline, the diesel, the electricity (for the electric vehicles), and the other fuel costs. The fuel receipts must show the date, the amount, and the vehicle.
• Insurance: The vehicle insurance premium (the "auto insurance" — the 12-month premium or the month-to-month premium).
• Maintenance and repairs: The oil changes, the tire rotations, the brake pads, the engine repairs, the body repairs, the winter tires, and the regular maintenance.
• Lease payments: The lease payments are deductible up to the "prescribed leasing limit" (approximately $800 per month). The leasing limit is indexed to the inflation.
• Interest: The interest on the vehicle loan is deductible up to the "prescribed interest limit" (approximately $300 per month). The interest is deductible only if the vehicle is used for the business.
• CCA: The depreciation on the vehicle at 30% (the Class 10 — the "passenger vehicle" CCA). The CCA is limited to the "capital cost limit" (the $35,000 limit for the passenger vehicles). The "zero-emission vehicle" (the "ZEV" — the electric vehicle, the plug-in hybrid) is eligible for the Class 54 (the "ZEV class" at 40% with the capital cost limit of $55,000).

Employer-Provided Vehicles

• Standby charge: The taxable benefit for the personal use of the employer-provided vehicle. The standby charge is calculated as 2% of the cost of the vehicle (or the lease payments) multiplied by the personal-use percentage. The standby charge is reduced if the business use is "primarily" (50%+) and the personal kilometers are below the "prescribed threshold."
• Operating expense benefit: The taxable benefit for the operating costs (the fuel, the maintenance, the insurance) paid by the employer. The operating expense benefit is $0.30 per personal kilometer (the "2025 prescribed rate"). The employee can elect the "alternative calculation" (the "1/2 of the standby charge" deduction) if the operating costs are tracked.
• Tax-free allowance: The employer can pay the "tax-free automobile allowance" to the employee for the business use of the personal vehicle (the "$0.70 per km" for the first 5,000 km and "$0.63 per km" for the km above 5,000). The allowance is tax-free if it is "reasonable" (the CRA's prescribed rates).

For the business expenses and the home office deduction, see our Business Expenses Guide →. For the home office expenses and the workspace deduction, see our Home Office Expenses Guide →.