---
title: How to Deduct the Business Use of a Personal Vehicle for Your Corporation
description: Learn how to deduct business vehicle expenses for your corporation efficiently, maximizing tax benefits. Track usage, calculate expenses, and maintain proper documentation for compliance.
---

[Toro Accounting Blog](https://toroaccounting.ca/blog)

# [How to Deduct the Business Use of a Personal Vehicle for Your Corporation](https://toroaccounting.ca/blog/how-to-deduct-the-business-use-of-a-personal-vehicle-for-your-corporation)

 Written by [Camilo Toro](https://toroaccounting.ca/blog/author/camilo-toro) | Jul 7, 2024 1:54:23 PM

When you use a personal vehicle for business purposes, your corporation can deduct the business-related expenses. This guide will walk you through the steps to accurately claim these deductions, ensuring compliance with tax regulations and maximizing your corporation’s tax efficiency.

#### 1. Determine the Business Use Percentage

To start, you need to track the total kilometers driven for both business and personal use over a specific period (typically one year). Keep a detailed logbook noting the date, destination, purpose, and distance traveled for each business trip.

**Example:**

- Total kilometers driven in a year: 20,000 km
- Kilometers driven for business purposes: 8,000 km
- Business use percentage: (8,000 km / 20,000 km) \* 100 = 40%

#### 2. Calculate Eligible Vehicle Expenses

You can claim the business use percentage of the total vehicle expenses. Eligible expenses include:

- Fuel and oil
- Maintenance and repairs
- Insurance
- License and registration fees
- Depreciation (Capital Cost Allowance - CCA)
- Loan interest (if applicable)
- Leasing costs (if applicable)
- Parking fees (if applicable)

#### 3. Reimbursement by the Corporation

The corporation can reimburse you for the business use of the vehicle. This reimbursement can be based on either the actual expenses or a reasonable per-kilometer rate set by the Canada Revenue Agency (CRA).

**Using Actual Expenses:** Calculate the total annual expenses for the vehicle and apply the business use percentage.

**Example:**

- Total annual vehicle expenses: $6,000
- Business use percentage: 40%
- Reimbursable amount: $6,000 \* 40% = $2,400

The corporation reimburses you $2,400, which is deducted as a vehicle expense on the corporation’s financial statements.

**Using CRA’s Per-Kilometer Rate:** The CRA sets a per-kilometer rate for business use of personal vehicles. For example, in 2023, the rates are:

- 68¢ per kilometer for the first 5,000 kilometers 
- 62¢ per kilometer for each additional kilometer

**Example:**

- Business kilometers driven: 8,000 km
- Reimbursement: (5,000 km \* $0.68) + (3,000 km \* $0.62) = $3,740

The corporation reimburses you $3,740, which is deducted as a vehicle expense on the corporation’s financial statements.

#### 4. Record-Keeping

Maintain detailed records, including:

- A logbook of business trips
- Receipts and invoices for all vehicle expenses
- Reimbursement requests and payments

#### 5. Filing Requirements

Ensure that the corporation correctly reports the vehicle expenses and reimbursements in its financial records and tax returns. If using the per-kilometer rate, the reimbursement is a straightforward deduction. If using actual expenses, detailed documentation is essential to justify the business use percentage.

### Example of Implementation:

**Step 1: Logbook** Maintain a logbook and determine that 40% of the kilometers driven are for business.

**Step 2: Calculate Expenses** Total vehicle expenses: $6,000

**Step 3: Reimbursement** The corporation reimburses you $2,400 (40% of $6,000).

**Step 4: Record-Keeping** Keep all receipts, logbooks, and reimbursement records.

**Step 5: Reporting** The corporation deducts the $2,400 reimbursement as a vehicle expense on its financial statements and tax return.

### Conclusion

By following these steps, you can accurately claim deductions for the business use of a personal vehicle, ensuring compliance with CRA requirements and maximizing your corporation’s tax efficiency. Proper documentation and regular review of your records are essential to maintaining accurate and compliant expense claims.

[View full post](https://toroaccounting.ca/blog/how-to-deduct-the-business-use-of-a-personal-vehicle-for-your-corporation)

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