If you are a business owner using your vehicle for business and personal, you may have wondered how to track your mileage. You are not alone. In fact, most businesses don’t think about tracking their mileage until it’s time to file their tax returns. And at this time, a question that puzzles them is how they can prove their mileage to Canada Revenue Agency.
If you use your personal vehicle for business, the CRA wants solid records. This includes the amount you drove for personal and business activities.
The good news is that once you understand how mileage tracking works in Canada, the whole thing becomes much less intimidating. You can easily claim legitimate expenses, stay on good terms with the CRA, and stay on top of your finances.
So let’s see how you can track mileage for your business.
Why Mileage Tracking Matters in Canada
So why does tracking mileage matter to the CRA? Well it’s because the CRA lets you deduct part of your vehicle costs when you use your personal car for business. Unfortunately it’s not enough to guess how much you want to deduct. You need records that show when you drove, where you went, and why the trip counts as business.
Mileage logs matter because they determine two things:
- Whether your trips qualify as business use
- Your business-use percentage, which drives your deduction
That business-use percentage becomes the main reason for your claim. It affects how much of your fuel, insurance, maintenance, repairs, leasing costs, and depreciation you can write off. A common misconception businesses make is ballparking such numbers. While you can get away with it a few times, it is not good practice. In an audit, CRA auditors expect evidence. When people get audited and lose deductions, it’s almost always because they failed to properly track their mileage.
If you want to deduct motor-vehicle expenses safely, the it is important to track mileage properly.
What Counts as Business Use of a Vehicle
Before tracking anything, it helps to know what counts as business use of a vehicle. The CRA draws a clear line between business travel and personal travel. It should be quite clear which is which when tracking your mileage.
Business trips that count
Below are items that count as business trips:
- Meeting clients
- Driving to a job site
- Picking up supplies
- Driving between work locations
- Visiting your accountant or lawyer for business matters
Trips that never count
Below are items that never count as business trips:
- Commuting from home to the office
- Grabbing lunch unless it’s part of a business meeting
- Personal errands
- Driving to your side hustle if you also have a primary office
- Dropping your kid at school on the way to a client
Canada treats commuting as personal. This is because they mileage to start when work starts, typical of when you arrive at a regular 9-5 workplace. Commute time is considered personal time, no matter how many emails you answer in your car.
Mixed-purpose trips
In some cases, you may have mixed-purse trips. These are trips where you drive across town, and conduct business and personal activities. In such a case, the CRA wants you to log only the business portion. If it’s messy or hard to split, you can often estimate the mileage for the business segment as long as your reasoning is clear. The key is honesty, not perfection.
CRA Methods for Claiming Motor-Vehicle Expenses
The are two main ways that CRA allows Canadians to claim mileage or vehicle expenses. Once way is with the Actual Expense Method. The other is with the Per-Kilometre Allowance method. The method you choose will determine what needs to be tracked when it comes to tracking mileage or vehicle expense. Let’s look at both methods.
The Actual Expense Method
The actual method is for those who are meticulous about their bookkeeping. This method requires those making claims to keep record and track all receipts pertaining to vehicle expense. Here are a few things business owners can deduct and track using the actual expense method. With this method, you still have to track mileage to account for personal and business of the vehicle.
- Fuel
- Repairs
- Insurance
- License and registration fees
- Lease payments or CCA (depreciation)
- Interest on car loans
- Parking and tolls
In order to track the above expenses, you apply your business-use percentage to the amounts you are claiming. For example, if 40 percent of your driving is business, you can claim 40 percent of your eligible costs.
This method requires the detailed mileage log.
The CRA Per-Kilometre Allowance
The second way to track vehicle expenses is to use the per-kilometre allowance. Here, instead of claiming actual expenses, you calculate your deduction using CRA’s annual per-km rates. The rate changes every year, and it’s usually lower for each kilometre after the first 5,000.
This method still requires tracking kilometres, but you don’t need to keep receipts for fuel, repairs, or anything else. Many business owners use this method because it is less meticulous compared to the actual expense method.
For employees who are being reimubursed for vehicle expenses, they can only use the per-km rate. Most self-employed businesses also stick to this method in comparison to the actual expense method.
Who Can Claim Mileage in Canada
People get confused about this because the rules differ depending on your work situation.
Self-employed workers
If you run your own business, you can absolutely claim mileage as long as
- The trip is business-related
- You track everything accurately
This includes sole proprietors, freelancers, independent contractors, and side-hustlers.
Employees
Employees can only deduct vehicle expenses if
- They are required to use their own vehicle for work
- They do not receive a non-taxable reimbursement
- Their employer signs a T2200 or T2200S form
Without that T2200, CRA denies the claim instantly. A lot of employees are surprised by this because their boss told them verbal permission was enough. It isn’t.
Gig-economy drivers
If you deliver food or drive rideshare, your car is basically your office. Your logs become even more important because CRA knows gig drivers mix personal and business travel constantly.
What a CRA-Compliant Mileage Log Must Include
Let’s get specific. The CRA requires you to use mileage logs when calculating your vehicle expenses. Every mileage log must include certain data points. Miss a few too often and your log loses credibility.
A proper mileage log needs:
- The date of each trip
- Your destination and origin
- The purpose of the trip
- Starting and ending odometer readings
- The kilometres driven for business
- Your odometer reading on January 1 and December 31
These are the the core items for compliance.
How long to keep mileage logs
The CRA expects you to keep your records for six years after the end of the tax year. Digital logs count as long as you can produce them if requested.
Why annual odometer readings matter
The CRA uses these two readings to calculate your total yearly kilometres. If your annual numbers don’t back up your business-use percentage, the claim falls apart.
What a Good Mileage Log Actually Looks Like
A good mileage log contains the core items mentioned above. Here’s a very plain, simple example of what a daily entry might look like:
Date: March 4
Start Odometer: 57,440
End Odometer: 57,486
Business KM: 46
Purpose: Drive to client meeting at Maple Street, then pick up supplies for Project A.
Could you write more? Sure. Do you need to? Not really. What’s important is that the core elements are captured in the log. The CRA cares that the log shows real activity, not perfection.
Now that we know what a good mileage log looks like, here’s a quick rundown of common mistakes that make mileage logs less credible:
- Logging only total kilometres, not start and end readings
- Forgetting the purpose of the trip
- Relying on guesses
- Mixing commute kilometres into business totals
- Submitting a log with the same numbers every month
The CRA looks for patterns that feel too tidy. Human beings don’t drive the exact same number of kilometres every time. Therefore, your mileage logs should also contain some level of variety.
Ways to Track Mileage: Manual, Digital, and Everything In Between
People love to argue about the best way to track mileage. The truth is that different methods fit different personalities. Let’s walk through the options and be honest about their strengths and weaknesses.
Paper logbooks
Old-school notebooks still work. They’re cheap, simple, and satisfy the CRA just fine if you fill them out consistently.
The downside is that you have to remember to use them every single time. Miss a week and you’ll never piece together what happened. And if you lose the book, that’s it.
Spreadsheets
Excel or Google Sheets are the middle ground. You can create formulas, totals, and yearly summaries. They’re tidy and more durable than paper.
But they still rely on manual entry. And people aren’t great at manual entry. Someone always swears they’ll log every day, then forgets for a month and ends up scrolling through calendar invites trying to remember what they did.
Mileage-tracking apps
This is where most people end up. Apps use GPS to track your drives automatically, then you categorize them as business or personal.
Common features:
- Automatic trip detection
- Route history
- Cloud backups
- One-tap trip classification
- Monthly and annual summaries
- Email export for your accountant
Apps reduce the friction of tracking. The only risk is forgetting to classify trips for too long, which turns your log into a messy backlog of unknown entries. But even then, you still have better data than anything manual.
Telematics and built-in vehicle systems
Some newer cars record trip data automatically. Fleet telematics systems do this too.
If you’re a gig driver or someone who drives a lot, telematics make tracking mileage a breeze. Just drive, and when you are done, export the logs and you’re done.
Some people get uncomfortable with the amount of tracking telematics do for them, but that’s a personal choice. One thing is certain, telematics automate mileage tracking so you never forget to track your mileage.
How to Calculate Business-Use Percentage and Claim Expenses
Let’s now talk about how to calculate business-use percentage of a vehicle and how to claim the expense. Here are the steps below:
Step 1: Figure out your total annual kilometres
This comes from your January 1 and December 31 odometer readings.
Step 2: Add up your business kilometres
That’s where your log comes in.
Step 3: Calculate your business-use percentage
Business km / Total km = Business-use percentage
If you drove 9,000 km for business out of 22,000 total
9000 / 22000 = 40.9 percent
That means you can deduct 40.9 percent of your eligible vehicle expenses.
Eligible expenses you can claim
This includes:
- Fuel
- Repairs
- Oil changes
- Tires
- Insurance
- License and registration fees
- Car washes (yes, they count)
- Parking for business trips
- Loan interest
- Lease costs
- CCA if you own the car
People often forget about CCA. It’s basically depreciation, and it can be a significant deduction if the car is expensive.
Comparing the allowance method
Using the CRA per-km rate often gives smaller deductions for self-employed people, but it’s simpler. No receipts needed, just the kilometres.
The actual expense method usually wins if
- Your vehicle is pricey
- Your fuel costs are high
- You drive a lot for business
- You maintain the car well
Special Cases Where Mileage Tracking Gets Weird
Mileage rules don’t always fit real life neatly. Let’s go through a few situations that come up often.
Gig-economy drivers
Rideshare and delivery drivers basically live in their vehicles. The CRA knows this, so logs matter even more. Every repositioning drive counts. Waiting for requests doesn’t count because you’re not moving, but driving to a hotspot does.
Employees
Employees often get tripped up by the T2200 requirement. Even if you drive your car all day for work, you can’t claim a deduction unless your employer confirms that you must pay your own expenses and that you’re not getting reimbursed.
Multiple vehicles
If you switch between cars, you must maintain separate logs. Yes, it’s annoying. There’s no workaround.
Mixed-purpose trips
If your trip has a personal stop in the middle, log the business portion only. Don’t agonize over it. Just be consistent and reasonable. If you stop at the pharmacy on the way back from a client meeting, that doesn’t invalidate the whole trip.
Best Practices for Audit-Ready Mileage Logs
If you’ve made it this far, you probably want the simplest possible advice for keeping the CRA happy.
Update your logs regularly
Daily is ideal. Weekly is fine. Monthly starts getting shaky. Anything more than that and you’re reconstructing instead of recording, and CRA auditors can smell reconstruction a mile away.
Back everything up
If you use apps, export your logs monthly to a PDF or spreadsheet. If you use paper, scan it occasionally. Hard drives fail and notebooks get coffee spilled on them.
Be honest
If your business-use percentage is 92 percent, the CRA will raise an eyebrow unless you’re a mobile worker who literally lives in their car. Real life usually falls somewhere between 20 and 70 percent.
Keep your receipts
Even if you’re using mileage logs for business-use percentage, remember that the CRA still expects actual expense receipts if you’re claiming vehicle costs under the actual expense method.
Tools and Templates You Might Find Helpful
If you’re the DIY type, a simple spreadsheet works well. Set up columns for date, purpose, start odometer, end odometer, and business kilometres. Add a yearly summary tab. It’s not glamorous, but it works.
If you prefer something more polished, many apps export CRA-friendly reports that your accountant will appreciate. The specific app doesn’t matter as much as whether you’ll actually use it every day.
And if you love paper, grab a physical mileage logbook and keep it in your glove compartment. Sometimes the simplest tools win.
Final Thoughts
Tracking mileage isn’t fun, but it doesn’t need to feel like a chore either. Once you get into the rhythm of logging your drives, the whole process becomes part of the background noise of running a business in Canada. The biggest benefit is peace of mind. When tax season hits, you won’t be scrambling to remember what happened in March or guessing how much of your driving was actually business-related.
A good mileage log protects your deductions, reduces your tax bill, and gives you a clean conscience in case the CRA ever asks questions. Start today. Do it imperfectly, then refine it as you go. Your future self will be grateful.