Yes, you can deduct vehicle expenses from your side hustle income if you use your car for business purposes. The CRA allows two main methods: the simplified mileage rate method or the actual expense method. For 2026, you'll need to track either the kilometres driven for business or keep detailed records of all vehicle costs. Which method works best depends on your situation, how much you drive for your side hustle, and how comfortable you are with record-keeping. Canada Revenue Agency recognizes two ways to claim vehicle expenses from self-employment income: This is the easiest approach for most side hustlers. You claim a fixed amount per business kilometre driven, rather than tracking every gas receipt. For the 2026 tax year, the rates vary by province but typically range from 65 cents to 70 cents per kilometre. You only need to keep a mileage log showing: Date of trip Starting and ending location Business purpose Total kilometres driven This method is ideal if your side hustle involves delivery, client visits, or frequent travel. You won't need to save gas receipts or calculate fuel costs. With this approach, you deduct the real costs of operating your vehicle.
No, vehicle loan interest isn't deductible as a business expense. However, if you lease your vehicle, the lease payments may be deductible as an operating cost. You'll still need to track the business-use percentage.
You can only deduct the portion used for your side hustle. Track business kilometres separately and calculate your business-use percentage. For example, if 30% of your driving is for the side gig, you deduct 30% of vehicle costs.
Yes. Even with the simplified mileage rate, you must track the date, location, purpose, and kilometres for each business trip. The CRA expects this documentation if you're audited.
It depends on your situation. If you have high fuel or maintenance costs, the actual expense method may save more. If you have low mileage and limited expenses, the simplified rate method is easier and often comparable. Try both scenarios to see which is better.
Yes, you can claim capital cost allowance (CCA) on a vehicle used for business, but it's more complex than claiming fuel and maintenance. CCA reduces your vehicle's cost base for future tax purposes, so consult a tax professional to ensure it makes sense for you.