How to calculate business portion of motor vehicle expenses

If you use your vehicle strictly for your business, you can deduct 100% of your vehicle expenses. However, in many cases, the vehicle is used for business and personal use. In this case, you can only deduct the part of the expenses related to your business.

The formula to calculate the business portion of vehicle expense:

Business kilometers / Total kilometer x Total expenses

 

Here is an example:

Kilometers driven to earn business income …. 24,000

Total kilometers driven during the year ……... 30,000

Gas and oil …………………………………… $2,500

Insurance …………………………………….. $2,000

Interest ………………………………………...$ 400

License and registration fees ……………$ 75

Maintenance and repairs …………………$ 325

 

Total expenses ……………………………  $5,300

 

The business part of expenses is calculated as:

24,000/30,000 x $5,300 = $4,240

 

Business parking …………. $100

Supplementary business insurance ….. $300

You can deduct 100% of parking fees related to your business activities and supplementary business insurance for your motor vehicle. So total deductible business vehicle expenses are $4,240 + $100 + $300 = $4,640. You can claim this amount on line 9281 of Form T2125.

 

Additional information