Car expenses and logbooks for delivery drivers in Canada

The rule: business share of actual costs

The CRA's motor vehicle expense rules for self-employed people are built around a single ratio. If you use the same vehicle for business and personal driving, you deduct only the business portion of the vehicle's running costs:

The CRA's own example is a vehicle driven 30,000 km in the year, of which 27,000 km were for business, with C$7,000 of expenses. The business share is 90% and the deduction is C$6,300. Our calculator uses exactly this formula.

This is a different system from the per-kilometre rates the CRA publishes. Those rates are used by employers who reimburse employees for driving their own vehicle, and they are not how a self-employed driver claims a vehicle on the T2125. If you have seen a "cents per km" figure quoted for self-employed drivers, treat it as a US-style idea that does not apply here (the US IRS mileage rate is a different system).

What counts as a vehicle cost

The CRA lists these as deductible, in the business proportion, on line 9281 of the T2125:

• licence and registration fees
• fuel and oil (or electricity, for a zero-emission vehicle)
• insurance
• interest on a vehicle loan (limits apply to passenger vehicles)
• maintenance and repairs
• lease payments (limits apply to passenger vehicles)

Capital cost allowance (CCA), the tax version of depreciation, is claimed separately if you own the vehicle, and a passenger vehicle has limits on the cost that can be claimed. Parking fees and supplementary business insurance can be claimed in full, even when the vehicle is also used personally. CCA is a decision with long-term consequences, so many drivers ask a professional before claiming it on a vehicle they will later sell. Our calculator does not calculate CCA; add any amount you work out separately to other expenses.

What a logbook must contain

The business share only holds up if you can prove the business kilometres and the total kilometres. The CRA's guidance on motor vehicle records asks for:

• The odometer reading at the start and end of your fiscal period (for most drivers, January 1 and December 31), which gives total kilometres.
• For each business trip: the date, the destination, the purpose, and the kilometres driven.
• The odometer reading and date whenever you buy, sell or change a vehicle.
• A separate record for each vehicle if you use more than one.

Keep these records for six years from the end of the tax year they relate to. For a base-year logbook (see below), the six years run from the last year the base year is relied on.

A delivery-driver logbook in practice

A delivery shift is not one trip, it is dozens. The CRA requires a record of each trip's date, destination, purpose and kilometres, but many drivers now keep these with a mileage-tracking app that records trips automatically, plus a notebook for the odometer readings. What matters is that the record is made at the time and can be explained. A spreadsheet rebuilt in April from memory is a weak record. A practical routine:

1. Photograph the odometer on January 1 and December 31 and keep the images.
2. Record kilometres each day you work: start, end, and what you were doing.
3. Mark non-work driving (personal trips) too, so that business plus personal adds up to the odometer total.
4. Total the logbook each month and compare against the odometer.
5. Save the vehicle receipts in one folder, or photograph them with your phone.

Which kilometres are "business" for a delivery driver? The test is kilometres driven to earn income. Driving to a restaurant and then to a customer clearly qualifies. Where the working day begins, for example the drive from home to the first pickup zone, is a judgement call that depends on your facts, and the CRA does not hand drivers a bright-line answer. Be consistent, write down your rule in the logbook, and ask a tax professional if a large share of your kilometres sit in this grey area.

The simplified logbook

You do not have to keep a full logbook every year. The CRA allows a simplified approach: keep a complete, detailed logbook for one full 12-month year, called the base year, to establish your business use of the vehicle. In later years you can keep a detailed record for a representative three-month sample and use it to work out the business use for the year, as long as the result stays within 10% of the base year's result. If your pattern of driving changes, for example you start working many more hours, go back to a full logbook.

What the logbook is worth

The following examples hold everything constant except the business kilometres you can prove. Driver profile: gross income C$50,000, 40,000 km driven in total, vehicle costs C$12,000, other expenses C$1,000, British Columbia, 2026. Results are from the same engine as the calculator.

Without records the driver pays C$10,914. With a logbook showing 30,000 business km, they pay C$8,022, a difference of C$2,892. Between 24,000 and 36,000 business km, the bill changes by C$1,169. Every extra 1,000 business km you document is worth roughly C$97 of tax at this income level. A logbook takes minutes a day. The result is also lower CPP, because the deduction reduces the net business income that CPP is calculated on.

The flip side is that the deduction is only as good as the proof. If the CRA reviews your return and your logbook cannot support the percentage you claimed, the claim may be reduced and you could face interest and penalties on the extra tax. Never inflate business kilometres.

Own, finance or lease

• Own with no loan: costs are fuel, insurance, repairs, registration and parking. You may claim CCA if you choose.
• Loan: interest is a deductible expense in the business proportion, up to the CRA's limits for passenger vehicles.
• Lease: lease payments are deductible in the business proportion, with monthly limits for passenger vehicles. The CRA's page lists the limit for the year, so check it for the vehicle and the dates of your lease.
• Electric vehicles: electricity is treated like fuel. Zero-emission vehicles have special CCA rules; see the CRA's motor vehicle expenses page.

GST/HST and your vehicle

If you are registered for GST/HST, the tax you pay on vehicle costs may be claimed as input tax credits in the business proportion, which changes the amount that goes on your income tax return. See the GST/HST guide for how registered drivers account for this.

Mistakes to avoid

• Using a cents-per-kilometre figure instead of actual costs.
• Building the logbook after the year ends.
• Counting a vehicle you also use for family travel as 100% business.
• Forgetting the January 1 and December 31 odometer readings.
• Deducting both the business share and 100% of a cost.
• Throwing away receipts before the six-year period has ended.

Frequently asked questions

Can I deduct kilometres between orders while waiting?

Kilometres driven while you are working, including repositioning between orders, generally count as business kilometres under the "driven to earn income" test; confirm your own situation with the CRA or a tax professional. The more waiting you do parked rather than driving, the fewer kilometres you have, but all of your fixed costs (insurance, registration) still count in the business share.

What if I have two vehicles?

The CRA wants a separate record for each. Calculate each vehicle's costs and business share separately.

Do I have to use the logbook percentage for the whole year?

Yes, the percentage applies to the year's costs. If you change vehicles mid-year, record the change dates and odometer readings, and calculate each vehicle separately.

Sources

• CRA, Motor vehicle expenses: deductible expenses, business-use ratio and example, logbook and simplified logbook, six-year retention, passenger-vehicle limits
• CRA, Motor vehicle records
• CRA, Automobile or motor vehicle allowances: per-kilometre allowance rates are an employer-employee arrangement
• CRA, Gig economy: keep track of your income and your expenses