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Businesses . . . Taxes . . . Automobile . . .
Auto Log Requirement
In order to justify claims for
automobile expenses for vehicles that are used for both business and personal
purposes, taxpayers should keep an auto log. While this may be a cumbersome task
for some taxpayers, claims made on the basis of guesswork are difficult to
defend should they be questioned by the CRA.
The auto log should contain columns for
the following information:
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Date
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Purpose of trip
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Beginning odometer reading
(generally the same as the ending reading from the previous entry if all
trips are recorded)
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Ending odometer reading
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Incidental expenses - e.g. parking,
coin car washes, where there are no receipts
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For ease of calculating the
business-use portion, some method of distinguishing business trips from
personal trips should be implemented. The following guidelines will help in
determining if a trip is for business or for pleasure:
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Driving from home to work is
considered to be a personal expense, even if the trip is outside of normal
work hours. There are a couple of exceptions to this rule:
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Employees who are instructed by
their employer (or have employer permission) to drive directly from home to
a different location than their usual work location to perform company
business are considered to be on business from the time they leave home.
Similarly, if the employee goes home directly from a work location other
than his normal work location (e.g. after running an errand for his
employer) then the entire trip is considered to be for business purposes.
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Self-employed individuals who
operate their businesses out of their homes and drive from there to meet
with a client are considered to be on business from the time they leave
their home workplace. Trips from home to the office (or vice versa) are
personal except if some business activity is performed en route.
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