Business use of personal auto..... Be reasonable!
Bruce_C49
Member Posts: 38
In Canada, self employed entrepreneurs can deduct a portion of their auto expenses used for business purposes. Gas, maintenance,license and interest on a car loan (as well as lease costs to a prescribed maximum) can be deducted in a section of the T2125 form.
The formula is kilometres driven for business use/total kilometres driven in the year. This percentage is then multiplied by the total auto expense in the previous paragraph. If the CRA wants to look at your auto expenses you will need to produce a detailed auto log. Realistically, they will only want to look at your auto expenses if your business use of personal auto is too high.
The predicating factors: (a) the overall business profitability (b) the auto expenses as a percent of your service industry's expenses.
Carefully determine an auto percentage; be reasonable and it is highly unlikely the CRA will ever ask for your mileage log.
Comments
Thank you for these posts, @Bruce_C49! I really appreciate the insight and I'm sure other Community members do as well!