How Are Auto Expenses Claimed?

The rules for claiming automobile expenses are similar for both employed and self-employed people, and they are also among the most frequently audited. Taxpayers will want to keep proper documentation and make the claims correctly.

Automotive expenses can only be deducted if they are not reimbursed by the employer. An employee who receives a reasonable allowance for the use of the vehicle may not claim the related expenses. Otherwise, employees can deduct auto expenses when they pay their own auto expenses and are required to use their vehicle in carrying out their duties of employment.  The employer must certify that the employee is required to pay those expenses and was not reimbursed by completing and signing Form T2200 Declaration of Conditions of Employment.

For those who use their vehicle for both personal and business/employment purposes, it is necessary to keep an auto log that records distance driven for both purposes, for at least one year (the base year). After this you can keep the records for as few as three consecutive months each year. So long as your driving patterns do not vary on either side by more than 10%, you will be able to claim full expenses multiplied by the ratio determined by the number of kilometres driving for employment or business purposes over the total driving for the year.

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