Keeping a vehicle logbook for business driving in Canada: what the CRA expects, and a method that takes two minutes a day

Many self-employed people drive for work: to customers, to suppliers, to a bank, between jobs. The Canada Revenue Agency lets a sole proprietor deduct the business share of the costs of running a vehicle. What it asks in return is a record that shows how much of the driving was for business. That record is the logbook, and without it the deduction rests on an estimate that is hard to defend.

This note covers what the CRA expects a logbook to contain, the simplified logbook rule that means you do not have to keep a full one every year, what you can deduct, and a method that keeps the whole thing to a couple of minutes a day. Every rule comes from CRA and Department of Finance pages listed at the end, checked on 1 October 2026. It is general information, not tax advice.

What each trip entry needs

According to the CRA's page on motor vehicle records, for each business trip you should list:

• the date;
• the destination;
• the purpose of the trip;
• the number of kilometres you drove.

You also record the vehicle's odometer reading at the start and end of each fiscal period, and again if you change vehicles during the year. If you use more than one vehicle for the business, keep a separate record for each.

Those two odometer readings are what make the logbook useful. They give your total kilometres for the year. Your business kilometres, added up from the trip entries, divided by the total, is the business-use share the deduction is built on. The CRA's records page frames it as tracking total kilometres alongside the kilometres driven to earn business income.

The simplified logbook: one full year, then three months

Keeping a trip-by-trip log every day of every year is tedious, and the CRA does not require it. Its records page describes a simplified logbook:

1. Keep a full logbook for one complete year. This is your base year, and it shows your normal business use.
2. In later years, keep a logbook for a three-month sample period. If the business use in the sample is within the same range as the base year, within 10 per cent, you can use it to work out the business use for the whole year.

The calculation the CRA gives is:

(Sample year period % ÷ Base year period %) × Base year annual % = Calculated annual business use

The CRA's own worked example: a sample period showing 51 per cent business use, against 46 per cent for the same period of the base year, with 49 per cent for the whole base year, gives (51 ÷ 46) × 49 = 54 per cent. Because 54 per cent falls within 10 points of the base year's 49 per cent (between 39 and 59), it is acceptable.

Two cautions. First, the method only works while your driving pattern stays steady, which is what the 10 per cent test checks; if a sample period falls outside that range, you cannot rely on it. Second, the base-year logbook has to be kept for six years from the end of the last tax year in which you use it, not six years from when you wrote it. If you rely on a 2026 base year until 2030, you keep that logbook until the end of 2036.

What you can deduct

The CRA's list of deductible motor vehicle expenses for a business is:

• licence and registration fees;
• fuel and oil costs, and electricity costs for zero-emission vehicles;
• insurance;
• interest on money borrowed to buy the vehicle;
• maintenance and repairs;
• leasing costs.

You claim the business share of those on Form T2125, and capital cost allowance (the tax version of depreciation) on the vehicle itself separately. Keep the receipts as well as the logbook: the log proves the share, and the receipts prove the costs.

Passenger vehicles have limits

The CRA treats some vehicles differently. A passenger vehicle is, broadly, one designed to carry a driver and no more than eight passengers, with exceptions such as a van or pickup used 90 per cent or more to carry goods, equipment or passengers. Passenger vehicles are subject to limits on the capital cost allowance, interest and leasing costs you can claim.

For 2026, the Department of Finance announced these limits in January:

The ceiling caps the capital cost on which you can claim capital cost allowance; the business-use share then applies to what you claim.

About the per-kilometre rates you may have seen

The CRA publishes per-kilometre rates every year: for 2026, 73 cents for the first 5,000 kilometres and 67 cents after that in the provinces (77 and 71 cents in the territories). These are the rates the CRA considers reasonable for a business paying a vehicle allowance to its staff. They are not a way for a sole proprietor to calculate a deduction. If you work for yourself, you deduct the business share of your actual costs, which is why the logbook matters.

A method that takes two minutes a day

The rules are simple; the hard part is the habit. A routine that works:

1. Pick one place for the log and stick to it. A small notebook in the glove box, a notes file on your phone, or a spreadsheet with columns for date, start, destination, purpose and kilometres. Whatever you will actually open.
2. Write down the odometer on 1 January (or the first day of your fiscal period) and again on 31 December. Put both dates in your calendar now.
3. Log each business trip when you park, not at the end of the week. Destination and purpose take ten seconds while you remember them; "Customer site, quote" is enough.
4. Use the trip odometer. Reset it when you leave for a business trip and read it when you arrive. It is easier than subtracting two long numbers.
5. Once a month, total it up. Add the business kilometres and keep a running total. If the month is missing trips, fill them in from your calendar or invoices while you still can.
6. Choose a base year deliberately. Make your first full logbook year a normal one, then use three-month samples in the years that follow.
7. File it with the year's receipts, and keep it for six years from the end of the last year you rely on it.

A phone app that records trips automatically can work too, as long as each trip ends up with the four things the CRA asks for: date, destination, purpose and kilometres. Purpose is the one apps cannot fill in for you.

Drafted with AI assistance.

Sources

1. Canada Revenue Agency — Motor vehicle records canada.ca
2. Canada Revenue Agency — Motor vehicle expenses you can deduct canada.ca
3. Canada Revenue Agency — Type of vehicle canada.ca
4. Department of Finance Canada — Government announces the 2026 automobile deduction limits and expense benefit rates for businesses (January 2026) canada.ca
5. Canada Revenue Agency — Automobile and motor vehicle allowances (reasonable per-kilometre rates) canada.ca

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