# Vehicle expenses when you're self-employed

> How to claim the business share of your vehicle costs, keep a logbook the CRA accepts, use the three-month sample rule, and claim capital cost allowance.

- Web page: https://taxnotes.ca/guides/vehicle-expenses/
- For: Self-employed · Topic: Self-employment
- Last reviewed: 2026-10-11

If you drive your own vehicle to earn business income, you can deduct the business share of what it costs to run, plus capital cost allowance (CCA) for the vehicle itself. The business share comes from your kilometres, so the record you keep matters as much as your receipts.

## Which costs count

You can deduct the business share of:

- fuel and oil, or electricity for a zero-emission vehicle
- insurance
- licence and registration fees
- maintenance and repairs
- interest on money you borrowed to buy the vehicle
- leasing costs, if you lease it

You work out the claim in the motor vehicle expenses chart on Form T2125, Statement of Business or Professional Activities. CCA is claimed separately on the same form. Two costs aren't split by kilometres: parking fees for business trips and supplementary business insurance for the vehicle are fully deductible. Every claim has to be reasonable and backed by receipts.

## Your business share

If you use the vehicle for both business and personal driving, you can deduct only the business part. Divide the kilometres you drove to earn business income by your total kilometres for the year, and apply that share to your vehicle costs. If you drove 12,000 of 20,000 kilometres for the business, for example, you'd deduct 60% of the year's running costs.

If the business uses more than one vehicle, keep a separate record for each and work out each one's expenses separately. If you own or lease a passenger vehicle with someone else, the limits described below apply to all of you together, as if one person owned it.

## Keep a logbook

The CRA says the best evidence of business use is a logbook kept for the whole year. For each business trip, write down:

- the date
- where you went
- why you went
- how many kilometres you drove

Also record the odometer reading at the start and end of your fiscal period (your business year). If you change vehicles during the year, note the dates and the odometer readings when you buy, sell or trade.

## The three-month sample

Once you've kept a full logbook for one complete year (your base year), you can keep a logbook for just three months in later years, as long as you can show the base year still reflects your normal use. The sample is scaled to a full year: divide your business-use percentage for the sample period by your percentage for the same months in the base year, then multiply by the base year's annual percentage.

Say your base year showed 60% business use overall and 55% in January to March. This year, a January-to-March sample shows 58%. Your estimated business use is 58 ÷ 55 × 60, or about 63%.

The shortcut holds only while the result stays within 10 percentage points of the base year's annual figure (between 50% and 70% in this example). If it moves further than that, the sample is reliable only for those three months, and the rest of the year needs an actual record of your travel or other records; at that point, consider starting a new base year. Keep the base-year logbook for six years after the end of the last year you rely on it.

## Passenger vehicles have limits

Most cars, station wagons and vans, and some pickups, are passenger vehicles: designed mainly to carry people, with seats for the driver and no more than eight passengers. For a passenger vehicle or a zero-emission passenger vehicle, there are limits on the CCA, interest and leasing costs you can deduct. Form T2125 includes charts to work out the interest and leasing limits.

A van or pickup that seats no more than the driver and two passengers isn't a passenger vehicle if, in the year you bought or leased it, you used it more than 50% to carry goods or equipment to earn income. Neither is a van, pickup or similar vehicle you used 90% or more that year to carry goods, equipment or passengers to earn income. The CRA's Type of vehicle page has a chart for other cases.

## Capital cost allowance

You can't deduct the full price of a vehicle in the year you buy it. Instead, you claim CCA, a yearly deduction for part of its cost.

- **Class.** Motor vehicles go in Class 10, and so do passenger vehicles unless they meet the Class 10.1 conditions. A passenger vehicle that cost more, before sales tax, than the prescribed limit for the year you bought it goes in Class 10.1 instead: each one is listed separately, and its cost for CCA is capped at that limit plus the sales tax on it. Eligible zero-emission vehicles go in Class 54. The CRA's Classes of depreciable property page lists the limit for each year.
- **First year.** In the year you buy, you can usually claim CCA on only half of the net addition to the class. This is the half-year rule. The accelerated investment incentive effectively suspends that rule for eligible property acquired after November 20, 2018, that becomes available for use before 2028; the CRA's page on the incentive explains which property qualifies. Zero-emission vehicles in Class 54 have their own first-year rules instead.
- **Business share only.** Claim the business-use percentage of the CCA, the same share as your running costs. The Class 10.1 limit still applies when you split the cost this way.
- **It's optional.** You can claim any amount from zero up to the maximum. In a year when you don't owe tax, you might claim less: claiming CCA lowers the balance left in the class, so it reduces what you can claim in later years.

## If you're an employee instead

Employees can deduct vehicle costs only in narrower cases. You must normally have been required to work away from your employer's place of business or in different places, your employment contract must have required you to pay your own vehicle costs, and you can't have received a non-taxable allowance for them (generally one based only on a reasonable per-kilometre rate). Your employer also has to complete Form T2200, Declaration of Conditions of Employment, which you keep. You claim on Form T777, and driving between home and work counts as personal. The same passenger vehicle limits apply. See [employment expenses](https://taxnotes.ca/guides/employment-expenses/) for the rest of the rules.

## What to do

- Keep a full logbook for at least one year, then decide whether the three-month sample works for you.
- File receipts for every running cost, and note business parking separately.
- Check whether your vehicle is a passenger vehicle before you claim interest, lease costs or CCA.
- See [what you can deduct](https://taxnotes.ca/guides/what-can-i-deduct/) for your other business expenses, and estimate the effect on your tax with the [income tax calculator](https://taxnotes.ca/calculators/income-tax/).

## Sources

1. [Motor vehicle expenses](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses.html) (canada.ca)
2. [Deductible expenses](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses/deductible-expenses.html) (canada.ca)
3. [Motor vehicle expenses (not including CCA)](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/completing-form-t2125/motor-vehicle-expenses-including.html) (canada.ca)
4. [Calculating motor vehicle expenses](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/completing-form-t2125/calculating-motor-vehicle-expenses.html) (canada.ca)
5. [Motor vehicle records](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses/motor-vehicle-records.html) (canada.ca)
6. [Type of vehicle](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses/type-vehicle.html) (canada.ca)
7. [Classes of depreciable property](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance/classes-depreciable-property.html) (canada.ca)
8. [Personal use of property](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance/personal-use-property.html) (canada.ca)
9. [Basic information about capital cost allowance](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance/basic-information-about-capital-cost-allowance.html) (canada.ca)
10. [Accelerated investment incentive](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance/accelerated-investment-incentive.html) (canada.ca)
11. [Line 22900 – Other employment expenses](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses.html) (canada.ca)
12. [Motor vehicle expenses (employment expenses)](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses/motor-vehicle-expenses.html) (canada.ca)

Tax figures in this guide come from the TaxNotes.ca rates tables (https://taxnotes.ca/rates/), which cite the Canada Revenue Agency and, for Quebec, Revenu Québec.

Last reviewed: October 11, 2026

How to cite: "Vehicle expenses when you're self-employed", TaxNotes.ca, last reviewed 2026-10-11, https://taxnotes.ca/guides/vehicle-expenses/. For a figure or rule, also cite the official source listed above.

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