Yes, you can deduct vehicle expenses for a home-based business in Canada, but only if the vehicle is used for legitimate business purposes. The Canada Revenue Agency (CRA) allows self-employed individuals and business owners to claim a portion of vehicle costs that relate directly to earning income. The key is to track business-use kilometers separately from personal use, and only claim the business percentage of your total expenses. This applies whether you operate a consulting firm, trade business, delivery service, or any other enterprise run from your home. Business use includes driving to client meetings, job sites, supplier locations, and business appointments. It does not include commuting from your home office to a separate workplace, or personal errands like grocery shopping or visiting friends. If you use your vehicle for both business and personal reasons, you must calculate the percentage of kilometers driven for business purposes. For example, if you drove 15,000 kilometers total in a year and 6,000 were for business, your business-use percentage is 40%. You can only deduct 40% of your eligible vehicle expenses.
Yes, the CRA requires you to maintain records showing which trips were for business and which were personal. A logbook with dates, distances, and trip purposes is the best practice. Without this documentation, you risk losing your deduction claim if audited.
No, car payments are not deductible. However, you can deduct the interest portion of a vehicle loan and claim depreciation (CCA) on the vehicle's cost. Only interest is tax-deductible, not principal.
Yes, this CRA rule may apply to you. You can deduct the business-use percentage of your vehicle insurance premium, as long as you have documentation showing your business vs. personal kilometer breakdown.
Yes, trips from your home office to client locations count as business use and are deductible. The key difference is that your home is your established place of business, so these trips earn income and qualify for the deduction.
Yes, delivery-related mileage is business use and qualifies for vehicle deductions. Track all delivery trips separately, record kilometers, and keep receipts for fuel, maintenance, and other vehicle costs related to deliveries.