# Self-Employed Vehicle Expenses in Canada (T2125)

> There's no per-kilometre deduction in Canada. How to calculate motor vehicle expenses on Form T2125 line 9281, with the 2026 limits and worked math.

Published: 2026-08-09
Author: EveryLastMile
Canonical: https://everylastmile.app/blog/ca/vehicle-expenses-t2125
Tags: canada, t2125, cra-logbook, capital-cost-allowance, gst-hst

---
<Callout variant="warning">
  This article is general education about Canadian tax rules — not tax, legal, or accounting advice for your specific
  facts, and reading it doesn't create a professional relationship. EveryLastMile is not a CPA firm. Rates and rules
  change. Confirm anything you plan to rely on against Canada.ca, the Department of Finance Canada, and a qualified
  Canadian tax professional before you file.
</Callout>

You drove 18,000 kilometres for work last year. You've read that the CRA rate is 73¢ per kilometre. So the deduction is about $12,700, right?

No. And this is the most expensive misunderstanding in Canadian self-employment tax.

There is no per-kilometre deduction in Canada. None. The CRA's archived interpretation bulletin on this exact question — IT-521R, _Motor Vehicle Expenses Claimed by Self-Employed Individuals_ — says a claim calculated on a cents-per-kilometre basis "is not acceptable." The 73¢/67¢ figure everyone quotes is a ceiling on what an **employer** can pay an **employee** tax-free, prescribed under section 7306 of the _Income Tax Regulations_. It has no application to your return. Our [CRA mileage rate guide](/blog/ca/cra-mileage-rate) covers who that rate is actually for.

What you actually do is add up what the vehicle cost you, work out what share of your driving was for business, and deduct that share. It takes more effort. Done properly it often produces a larger deduction than the rate would have. Done badly — or reconstructed in April from a calendar and a hope — it produces a number you cannot defend.

This guide walks the whole calculation: what goes on line 9281, what goes on line 9936, which of the three caps might bite you, how GST/HST input tax credits change the arithmetic, what Quebec filers do differently, and what the deduction is actually worth in cash after tax and CPP.

**Key takeaways**

- **There is no per-kilometre method.** Self-employed Canadians deduct actual vehicle costs × business-use percentage. The 73¢/67¢ rate is an employer allowance ceiling.
- Operating costs go on **line 9281** of Form T2125. Capital cost allowance goes separately on **line 9936**. Partners using a personal vehicle claim on **line 9943**.
- **Business parking and supplementary business insurance are not prorated** — deduct them in full.
- Three caps apply to **passenger vehicles** in 2026: CCA ceiling **$39,000**, lease **$1,100/month**, interest **$350/month**. Whether they apply depends on how your vehicle is classified.
- Your **business-use percentage** is business kilometres ÷ total kilometres. Both numbers require a logbook. Records must be kept **six years**.
- Home-to-worksite driving is deductible **only if your home is the base of your business operations**. For many tradespeople and real estate agents, it is.

## The only method: actual costs × business-use percentage

The CRA describes one calculation. Total the expenses you incurred to run the vehicle during the fiscal period, then deduct the portion that relates to earning business income. The portion is business kilometres divided by total kilometres.

Here is the CRA's own published example, using its numbers.

A sole proprietor with a December 31 year-end drove **27,000 business kilometres out of 30,000 total**. Vehicle expenses for the year came to **$5,400**.

<ComparisonTable
  columns={["Line", "Amount"]}
  rows={[
    ["Business-use share: 27,000 ÷ 30,000", "90%"],
    ["$5,400 × 90%", "$4,860"],
    ["Plus business parking fees", "$40"],
    ["Plus supplementary business insurance", "$100"],
    ["Total claimed on line 9281", "$5,000"],
  ]}
/>

Note the last two lines. **Parking fees related to your business activities and supplementary business insurance for the vehicle are deductible in full**, not prorated. They sit outside the percentage calculation because they're incurred entirely for business. Most people miss this and shrink their own deduction.

### What counts as a vehicle expense

On line 9281:

- Licence and registration fees
- Fuel and oil
- **Electricity** for zero-emission vehicles
- Insurance
- Interest on money borrowed to buy the vehicle
- Maintenance and repairs
- Leasing costs

Capital cost allowance is **not** on line 9281. It goes on line 9936, calculated in Area A of the form. That separation trips people up constantly — line 9281 is explicitly labelled "not including CCA."

## Where everything goes on Form T2125

<ComparisonTable
  columns={["Item", "Where"]}
  rows={[
    ["Motor vehicle operating expenses", "Line 9281, Part 5"],
    ["Capital cost allowance", "Line 9936 (calculated in Area A)"],
    [
      "A partner's personal-vehicle costs",
      "Line 9943 — other amounts deductible from your share of net partnership income",
    ],
    ["Net income or loss", "Line 9946 → T1 line 13500"],
  ]}
/>

Three supporting charts do the work:

- **Chart A — Motor Vehicle Expenses.** Lists your costs, applies the business-use percentage, and produces the line 9281 figure. Chart B and Chart C results feed into it.
- **Chart B — Available interest expense.** Caps the deductible interest on a passenger vehicle or zero-emission passenger vehicle.
- **Chart C — Eligible leasing costs.** Caps the deductible lease payments on a passenger vehicle.
- **Area A — Capital cost allowance.** Produces the line 9936 figure.

If you're leasing, you never touch Area A. If you own, you never touch Chart C. Almost nobody needs both.

## What kind of vehicle do you have? This determines everything

The caps apply to **passenger vehicles**, not to all vehicles. Get the classification right before you calculate anything, because a work truck that qualifies as an ordinary motor vehicle faces **no CCA ceiling, no lease cap, and no interest cap**.

For income tax there are four types: **motor vehicle**, **passenger vehicle**, **zero-emission vehicle (ZEV)**, and **zero-emission passenger vehicle (ZEPV)**.

A **motor vehicle** is an automotive vehicle designed or adapted for use on highways and streets. A **passenger vehicle** is a motor vehicle designed primarily to carry people, seating the driver plus **not more than eight passengers**. Most cars, station wagons, minivans and many pick-ups fall here.

The CRA's classification test turns on seating and use. Seating counts include the driver.

<ComparisonTable
  columns={["Vehicle", "Seats", "Business use in the year bought or leased", "Classification"]}
  rows={[
    ["Pick-up truck, or van", "1–3", "More than 50% to transport goods or equipment", "Motor vehicle — no caps"],
    [
      "Pick-up (extended cab), SUV, or van/minivan",
      "4–9",
      "90% or more to transport goods, equipment or passengers",
      "Motor vehicle — no caps",
    ],
    [
      "Pick-up truck",
      "1–3",
      "More than 50% to transport goods, equipment or passengers to a remote work location or special work site at least 30 km from the nearest community of 40,000 or more",
      "Motor vehicle — no caps",
    ],
    ["Anything else", "—", "1%–100%", "Passenger vehicle — capped"],
  ]}
/>

That third row matters in resource, construction and utilities work across the North and rural Canada, and it's almost never mentioned. A truck that would otherwise be a capped passenger vehicle becomes an uncapped motor vehicle if it's servicing sites far enough from a population centre.

The classification is tested **in the year you buy or lease the vehicle**, based on that year's use.

## The three 2026 caps

These come from the Department of Finance Canada announcement of January 14, 2026.

<ComparisonTable
  columns={["Cap", "2026 amount", "Applies to"]}
  rows={[
    [
      "Class 10.1 CCA ceiling",
      "$39,000 before tax",
      "Passenger vehicles (new or used) acquired on or after January 1, 2026",
    ],
    [
      "Class 54 ZEPV CCA ceiling",
      "$61,000 before tax",
      "Zero-emission passenger vehicles acquired on or after January 1, 2026",
    ],
    ["Deductible lease cost", "$1,100/month before tax", "Leases entered into on or after January 1, 2026"],
    ["Maximum interest deduction", "$350/month", "Loans entered into on or after January 1, 2026"],
  ]}
/>

**The date qualifiers are the whole game.** The ceiling that applies is the one in force when you acquired the vehicle or entered the lease — not the one in force in the year you're filing for.

<ComparisonTable
  columns={["Year acquired / lease entered", "Class 10.1 ceiling", "Lease cap", "Interest cap"]}
  rows={[
    ["2026", "$39,000", "$1,100/mo", "$350/mo"],
    ["2025", "$38,000", "$1,100/mo", "$350/mo"],
    ["2024", "$37,000", "$1,050/mo", "$350/mo"],
    ["2023", "$36,000", "$950/mo", "$300/mo"],
  ]}
/>

Bought your car in 2023? Your Class 10.1 capital cost is capped at $36,000, permanently. It does not rise to $39,000 because we're now in 2026.

### How Chart B actually works

The interest cap isn't a flat monthly test. It's a daily calculation: **$350 ÷ 30 × the number of days in the period the interest was payable.** Your deductible interest is the _lesser_ of that figure and the interest you actually paid.

<Stat
  value="$4,258"
  caption="Maximum deductible passenger-vehicle interest for a full 2026 calendar year: $350 ÷ 30 × 365. Pay $1,900 and you deduct $1,900; pay $6,000 and you deduct $4,258."
/>

If you see $10/day or $8.33/day on another site, that page hasn't been updated since 2023.

### How Chart C actually works

Chart C caps lease payments at **$1,100 per month**, calculated on the same daily basis. Chart C also contains a second restriction for expensive vehicles, tied to the manufacturer's list price — the cap can be reduced below $1,100 if the vehicle's list price is high enough. Work through the chart itself rather than assuming $1,100 is your number.

Any lease cost above the cap is **gone**. It isn't carried forward and it isn't recovered later.

## The business-use percentage, and the log that produces it

The percentage is the single number your entire deduction turns on. It requires two figures: business kilometres and **total** kilometres. Personal driving has to be captured too, because it's the denominator.

### The full logbook

For each business trip, record:

- **Date**
- **Destination**
- **Purpose**
- **Kilometres driven**

Plus the **odometer reading at the start and end of each fiscal period**. Record the date and odometer reading whenever you buy, sell or trade a vehicle. Using more than one vehicle for business? Keep a **separate record for each**, and calculate each vehicle's expenses separately.

The CRA's position is direct: the best evidence to support your use of a vehicle is a logbook maintained for the entire year.

### The simplified base-year logbook

Keep a full logbook for one complete **12-month base year**. In later years you may keep a **three-month sample** and project it, provided the result stays **within 10%** of the base year and the base year still represents how you use the vehicle.

The CRA's formula:

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

Worked through: base-year quarterly business use of 52%, 46%, 39% and 67%, giving **49%** for the year. In a later year, an April-to-June sample shows **51%**; those same months in the base year showed **46%**. So (51% ÷ 46%) × 49% = **54%**. Because 54% is within 10 percentage points of 49% — that is, between 39% and 59% — the CRA will accept it absent contradictory evidence.

**The prerequisite nobody mentions.** To run that comparison, you need **month-by-month odometer readings across the entire base year**, so the matching three months can be isolated. Manually, almost nobody keeps them. Which means most people who plan to use the simplified method in year two discover in year two that they can't.

### Retention

**Six years** from the end of the tax year the records relate to. A base-year logbook must be kept six years from the end of the **last** tax year in which it was used to establish business use — which can be a decade or more after you wrote it.

<Callout variant="tip">
  The percentage is the deduction. Everything else on this page is arithmetic performed on one number, and that number
  can only be built from a full year of trips — business and personal. Miss the personal trips and the denominator is a
  guess, which makes the whole deduction a guess.
</Callout>

## Which trips actually count

For self-employed people this is governed by different reasoning than the employee rules. The CRA's guidance is IT-521R, _Motor Vehicle Expenses Claimed by Self-Employed Individuals_. It's **archived** and dates from 1996, and interpretation bulletins don't carry the force of law — but it remains the CRA's stated interpretation, and the current Canada.ca pages echo it.

**The general rule.** Travel between your home and your place of business is personal, and not deductible.

**The exception that swallows it.** That rule applies "unless it is established that the home is the base of business operations." If you have an office or other fixed place of business somewhere else, your home is normally _not_ the base — and the commute stays personal.

IT-521R gives three situations where home-to-worksite travel _is_ business travel:

- A self-employed **anaesthetist** who does all administrative work from a home office and delivers services at hospitals.
- An **independent real estate agent** with a home office and no other business accommodation, who meets clients at their homes or at property sites.
- A **plumber, electrician or painter** whose office is at home, who stores supplies and equipment there, and who performs services at customers' premises.

If that's your working pattern, the drive from your driveway to your first job is deductible business travel — not a commute. If you also rent a shop, a studio, or a desk somewhere, it usually isn't.

Travel between different premises of the **same** business is deductible. Travel from one business to a separate, unrelated business is not.

Farming and fishing businesses report vehicle costs differently: **line 9819** for farming, line 9281 for fishing. The passenger-vehicle leasing limits still apply.

## Capital cost allowance, in brief

CCA is the deduction for the vehicle itself wearing out. It's calculated in Area A and claimed on line 9936, and it's genuinely its own subject — this section covers only what you need to file line 9281 correctly alongside it.

<ComparisonTable
  columns={["Class", "Rate", "What goes here"]}
  rows={[
    ["Class 10", "30%", "Motor vehicles, and passenger vehicles costing at or below the ceiling. Pooled together."],
    ["Class 10.1", "30%", "Each passenger vehicle costing more than the ceiling. A separate class for each vehicle."],
    ["Class 54", "30%", "Zero-emission passenger vehicles, capped at $61,000"],
    ["Class 55", "40%", "Zero-emission vehicles that would otherwise be Class 16"],
  ]}
/>

Class 10.1 has two features worth knowing. Your capital cost is **capped at the ceiling in force when you acquired the vehicle** — spend $55,000 in 2026 and you depreciate $39,000. And there is **no recapture and no terminal loss** on disposition. You also get a **half-year's CCA in the year you dispose** of a Class 10.1 vehicle you owned at the end of the previous year, which is unusual and easy to miss.

The half-year rule normally limits your first-year claim on other vehicle additions.

<Callout variant="info">
  **Zero-emission vehicles: 100% in 2026, and it is enacted.** A Class 54 zero-emission passenger vehicle acquired
  between 2025 and 2029 gets a **100% first-year write-off**, capped at $61,000 before tax. This was reinstated by Bill
  C-15, the _Budget 2025 Implementation Act, No. 1_, which received Royal Assent on **March 26, 2026**. The CRA's own
  _Classes of depreciable property_ page still introduces the change with "under proposed changes" wording — that's a
  lag in its editorial text, not a statement about the law. Any page presenting 55% as the 2026 zero-emission rate
  predates Bill C-15.
</Callout>

The same Act reinstated the **Accelerated Investment Incentive** for ordinary Class 10 and 10.1 vehicles: the half-year rule is suspended and the first-year allowance is one and a half times the class rate, giving an effective **45%** on a 30% class. Full treatment — the classes, the ceilings by acquisition year, recapture and terminal loss, and how Area A runs — is in our [vehicle CCA guide](/blog/ca/vehicle-cca-classes).

## GST/HST: input tax credits change your numbers

If you're registered for GST/HST, you recover tax on your vehicle costs through input tax credits — and you deduct your expenses **net of what you recovered**. Claiming the full tax-included cost _and_ the ITC is double-counting.

**When you must register.** You stop being a small supplier once worldwide taxable supplies exceed **$30,000**. Two triggers:

- You exceed $30,000 **in a single calendar quarter** — you must charge tax immediately on the supply that put you over, and register within **29 days**.
- You exceed $30,000 **cumulatively over four consecutive calendar quarters** — you're registered from the end of the month following that quarter.

The count excludes sales of capital property, goodwill and financial services.

**Passenger vehicles have their own ITC rules**, and they're not intuitive:

<ComparisonTable
  columns={["Commercial use", "ITC treatment on the purchase"]}
  rows={[
    ["90% or more", "Full ITC upfront, subject to the capital cost limit (the $39,000 ceiling for 2026)"],
    [
      "More than 10%, less than 90%",
      "No upfront ITC. Instead, each year you claim the tax fraction × the CCA you deducted that year — 13/113 in Ontario, 5/105 in a GST-only province. The ITC then reduces your CCA pool the following year.",
    ],
    ["10% or less", "No ITC"],
  ]}
/>

Operating costs — fuel, repairs, insurance where taxable — are apportioned on your ordinary business-use percentage.

Rates: **GST 5%**; **HST 13%** in Ontario and **15%** in Nova Scotia, New Brunswick, Newfoundland and Labrador and Prince Edward Island; GST only in Alberta, British Columbia, Saskatchewan, Manitoba and the territories.

## Worked example: Nadia, physiotherapist, Ontario

Nadia runs a mobile physiotherapy practice from a home office in Mississauga. She has no clinic — her home is the base of her business operations, so the drive to her first patient is business travel. She owns a 2026 CR-V that cost **$34,000** before tax, which puts it in **Class 10** (below the $39,000 ceiling).

**Step 1 — business-use percentage.** 16,800 business km ÷ 24,000 total km = **70%**.

**Step 2 — operating costs.**

<ComparisonTable
  columns={["Expense", "2026"]}
  rows={[
    ["Fuel", "$2,880"],
    ["Insurance", "$1,940"],
    ["Maintenance and repairs", "$1,240"],
    ["Licence and registration", "$150"],
    ["Interest on the car loan", "$1,680"],
    ["Total", "$7,890"],
  ]}
/>

Chart B check: the cap is $350 ÷ 30 × 365 = $4,258. Her actual $1,680 is lower, so all of it is available.

**Step 3 — prorate, then add the unprorated items.**

<ComparisonTable
  columns={["Line", "Amount"]}
  rows={[
    ["$7,890 × 70%", "$5,523"],
    ["Business parking (not prorated)", "$215"],
    ["Supplementary business insurance (not prorated)", "$180"],
    ["Line 9281", "$5,918"],
  ]}
/>

**Step 4 — CCA, separately.** Her Class 10 opening UCC is $22,100. CCA at 30% is $6,630, of which she claims the business share: $6,630 × 70% = **$4,641** on line 9936.

**Total vehicle deduction: $10,559.**

**Step 5 — what it's worth.** Net business income before the deduction is $71,000; after, $60,441. Both sit in the 20.5% federal band and Ontario's 9.15% band — a **29.65%** combined marginal rate — and both are below the YMPE, so CPP applies at the self-employed rate of 11.90%.

<ComparisonTable
  columns={["Line", "Amount"]}
  rows={[
    ["Income tax saved: $10,559 × 29.65%", "$3,131"],
    ["CPP reduced: $10,559 × 11.90%", "$1,257"],
    ["Less the value of CPP deductions and credits she also loses", "−$318"],
    ["Combined cash saving", "≈ $4,070"],
    ["Net value per business kilometre", "≈ 24¢"],
  ]}
/>

That CPP adjustment is worth understanding, because it's where most calculators go wrong. Self-employment CPP isn't uniformly deductible. The employer-equivalent half of the base contribution is deducted from income; the enhanced portion is also deducted; but the employee-equivalent half of the base contribution only generates a **non-refundable credit**, worth the lowest rate — 14% federally plus 5.05% in Ontario. Reducing your CPP also reduces those. Netting it out costs Nadia $318 of the headline $1,257.

**And the shortcut she can't use?** At 73¢/67¢, 16,800 km would be $11,556. Her actual deduction is $10,559 — about 9% less. Close enough to show the real point: **actual expenses aren't a worse deal, they're a different calculation.** Depending on your vehicle and your driving, you land above or below.

## Worked example: Bruno, real estate agent, British Columbia

Bruno leases. He's an independent agent in Vancouver with a home office, and in March 2026 he entered a lease at **$1,420 a month** before tax on a passenger vehicle.

**The lease cap bites immediately.** Chart C limits him to $1,100 per month on a daily basis: $1,100 ÷ 30 × 306 days (March 1 to December 31) = **$11,220**. His actual payments were $1,420 × 10 = $14,200.

**$2,980 of real, paid lease cost is simply not deductible.** It isn't carried forward. It's gone.

<ComparisonTable
  columns={["Line", "Amount"]}
  rows={[
    ["Eligible lease cost (Chart C)", "$11,220"],
    ["Fuel, insurance, maintenance, licence", "$6,120"],
    ["Total", "$17,340"],
    ["Business use: 21,600 ÷ 27,000", "80%"],
    ["$17,340 × 80%", "$13,872"],
    ["Business parking (not prorated)", "$980"],
    ["Line 9281", "$14,852"],
  ]}
/>

No Area A, no line 9936 — he doesn't own the vehicle.

Bruno's net business income is $96,000 before the deduction. In BC that puts him at a **28.2%** combined marginal rate, saving about **$4,188** in income tax. His CPP saving is small — most of the deduction falls above the $85,000 YAMPE where no further CPP is payable — adding roughly **$220**. Call it **$4,400** in cash.

The lease cap cost him: $2,980 × 80% = $2,384 of lost deduction, worth about **$672**. Worth knowing before signing a lease above $1,100 a month.

Bruno is GST-registered. British Columbia has GST only, so he recovers 5/105 of his taxable vehicle costs as input tax credits, apportioned at 80% — and deducts his expenses net of what he recovers.

## Quebec: TP-80-V, and a myth to correct

Quebec filers file twice. Form **T2125** goes to the CRA. Form **TP-80-V, _Business or Professional Income and Expenses_,** goes to Revenu Québec, with motor vehicle expenses at **line 220** and capital cost allowance at **line 240**. The reference guide is **IN-155-V, _Business and Professional Income_.**

**Revenu Québec uses the identical method.** Its guidance describes the ratio between kilometres travelled for business in the fiscal period and total kilometres travelled, supported by a logbook. Its published example: 6,000 business kilometres out of 10,000 total gives **60%**.

**The myth.** You will find pages stating that a self-employed Quebecer can deduct "Revenu Québec's per-kilometre rate." This is wrong twice over. Revenu Québec does not publish a per-kilometre deduction rate for self-employed people, and the method it does require is the same business-use-percentage calculation as the federal one. There is no provincial shortcut.

**QST.** The rate is 9.975%, administered by Revenu Québec. You recover it through an **input tax refund (ITR)** — the QST equivalent of an ITC — with the same passenger-vehicle apportionment logic. The old ITR restrictions applied only to large businesses with associated-group revenue over $10 million, and were fully phased out on January 1, 2021. They don't affect ordinary self-employed filers.

## What gets a claim reduced or denied

The CRA doesn't have to prove you didn't drive. Record-keeping is a statutory obligation under section 230 of the _Income Tax Act_ — you support the claim, or the claim doesn't stand.

The recurring failures:

- **No logbook, or an inadequate one.** Without date, destination, purpose and kilometres per trip, the business-use percentage is unsupportable — and it's the multiplier on everything.
- **No odometer readings** for the start and end of the fiscal period. The denominator becomes unverifiable, and so does the ratio.
- **A business-use percentage that doesn't survive scrutiny.** Claiming 95% on a household's only vehicle invites the obvious question.
- **Claiming the commute** where the home isn't the base of business operations.
- **Using a per-kilometre rate instead of actual costs.** Expressly not acceptable.
- **Failing to prorate** operating costs — or prorating parking and supplementary business insurance that should have been claimed in full.
- **Missing receipts.** Deductions must be reasonable under section 67 and supportable by vouchers.
- **A log reconstructed in April.** Rebuilding a year of driving from a calendar, card statements and location history produces a document that falls apart under any real examination.

## How automatic tracking solves the structural problem

Three features of the Canadian calculation make manual tracking fail in predictable ways.

**The deduction is a ratio, not a total.** Business kilometres alone are useless. You need total kilometres, which means logging the personal trips you have no motivation to log. Miss those and the denominator is a guess, which makes the whole deduction a guess.

**Four fields, contemporaneous.** Date, destination, purpose, distance. Three of the four are unrecoverable from memory a year later.

**The simplified method has a hidden prerequisite.** Month-by-month odometer readings across a full base year. Nobody sustains that with a glovebox notebook, which is why the shortcut that's supposed to save work in year two usually isn't available in year two.

EveryLastMile, an iOS mileage tracking app, is built around those three. Drive detection runs on-device using your iPhone's motion and location sensors, so trips are captured whether or not you remembered anything. Each drive is classified business or personal with a swipe, which produces the ratio rather than just the numerator. Every trip carries the date, route, distance and business purpose, and a CSV export hands the whole year to your accountant in one file.

It happens on your phone. Your location history isn't uploaded anywhere — which, for a record you're required to keep for six years, counts for something.

<Callout variant="info">
  EveryLastMile does not currently generate a CRA-formatted tax report. Canadian users export CSV and work from the
  underlying per-trip records — date, destination, purpose, and distance — which are the four fields the CRA asks for.
</Callout>

<FAQBlock
  items={[
    {
      q: "Can a self-employed person in Canada claim a per-kilometre rate for vehicle expenses?",
      a: "No. The CRA's guidance in IT-521R states that a claim calculated on a cents-per-kilometre basis is not acceptable. Self-employed people deduct actual vehicle costs multiplied by a business-use percentage. There is no per-kilometre election in Canadian tax law.",
    },
    {
      q: "What is the 2026 CRA per-kilometre rate, and who can actually use it?",
      a: "73¢ per kilometre for the first 5,000 business kilometres and 67¢ after, rising to 77¢ and 71¢ in the three territories. It caps what an employer can pay an employee as a tax-free allowance under section 7306 of the Income Tax Regulations. It is not a deduction.",
    },
    {
      q: "Can I use the CRA simplified method for my business vehicle expenses?",
      a: "No. The CRA's simplified travel method uses flat per-province cents-per-kilometre rates and applies only to medical expenses, moving expenses and the northern residents deductions. It cannot be used for business vehicle expenses by anyone, self-employed or employed.",
    },
    {
      q: "What motor vehicle expenses can I deduct on line 9281?",
      a: "Licence and registration fees, fuel and oil, electricity for zero-emission vehicles, insurance, interest on money borrowed to buy the vehicle, maintenance and repairs, and leasing costs — all multiplied by your business-use percentage. Business parking and supplementary business insurance are added in full without proration. Capital cost allowance is claimed separately on line 9936.",
    },
    {
      q: "How do I calculate my business-use percentage?",
      a: "Divide business kilometres by total kilometres driven in the fiscal period, then apply that percentage to your total vehicle expenses. Both figures come from your logbook and both need to be defensible.",
    },
    {
      q: "What information must my logbook contain?",
      a: "For each business trip: date, destination, purpose and kilometres driven. Plus odometer readings at the start and end of each fiscal period, the date and odometer reading whenever you change vehicles, and a separate record for each vehicle used for business.",
    },
    {
      q: "Can I keep just a three-month logbook instead of a full year?",
      a: "Only after you've kept a full logbook for one complete 12-month base year. In later years a three-month sample can be projected using the CRA's formula, provided the result stays within 10% of the base year. Using it requires month-by-month odometer readings from the base year so the matching months can be compared.",
    },
    {
      q: "Is driving from home to a job site or client deductible for a self-employed person?",
      a: "Only if your home is the base of your business operations. If you maintain an office, shop or studio elsewhere, your home is normally not the base and the drive is a personal commute. IT-521R gives examples where the home office makes the trip deductible — a home-office anaesthetist attending hospitals, an independent real estate agent with no other business accommodation, and a tradesperson storing supplies at home and working at customer sites.",
    },
    {
      q: "What's the difference between a motor vehicle and a passenger vehicle, and why does it matter?",
      a: "A passenger vehicle is designed primarily to carry people and seats the driver plus no more than eight passengers. Passenger vehicles are subject to the CCA ceiling, the lease cap and the interest cap. Ordinary motor vehicles — including qualifying work trucks and vans meeting the CRA's seating and use tests — face none of those limits.",
    },
    {
      q: "What are the 2026 CCA, lease and interest limits?",
      a: "Class 10.1 CCA ceiling $39,000 before tax; Class 54 zero-emission passenger vehicle ceiling $61,000; deductible lease cost $1,100 a month; maximum interest deduction $350 a month. The CCA ceilings apply to vehicles acquired on or after January 1, 2026, and the lease and interest limits to arrangements entered into on or after that date.",
    },
    {
      q: "How is CCA on a car calculated, and what is Class 10.1?",
      a: "Class 10 holds motor vehicles and passenger vehicles costing at or below the ceiling, pooled, at 30%. Class 10.1 holds each passenger vehicle costing more than the ceiling, in a separate class per vehicle, also at 30%, with the capital cost capped at the ceiling. Class 10.1 has no recapture and no terminal loss, and allows a half-year's CCA in the year of disposition.",
    },
    {
      q: "Can I deduct the interest on my car loan?",
      a: "Yes, subject to Chart B. For a passenger vehicle the deductible amount is the lesser of the interest you actually paid and $350 ÷ 30 × the number of days interest was payable — about $4,258 for a full 2026 year. The result is then multiplied by your business-use percentage.",
    },
    {
      q: "Can I claim GST/HST input tax credits on my vehicle, and how does the $30,000 threshold work?",
      a: "Only if registered. You must register once taxable supplies exceed $30,000 — immediately if you cross it in a single calendar quarter, or from the end of the month following the quarter if you cross it cumulatively over four consecutive quarters. For a passenger vehicle used 90% or more commercially, you claim a full ITC on the purchase subject to the capital cost limit. Between 10% and 90%, you instead claim the tax fraction of the CCA you deducted each year.",
    },
    {
      q: "How do vehicle expenses work in Quebec, and is there a Quebec per-kilometre rate?",
      a: "Quebec filers complete Form TP-80-V in addition to the federal T2125, reporting motor vehicle expenses at line 220 and capital cost allowance at line 240, with guide IN-155-V as the reference. Revenu Québec applies the same business-use-percentage method. There is no Quebec per-kilometre deduction rate for self-employed people.",
    },
    {
      q: "How long must I keep my vehicle records?",
      a: "Six years from the end of the tax year they relate to. A base-year logbook must be kept six years from the end of the last tax year in which it was used to establish business use.",
    },
  ]}
/>

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