Can I Claim Motor Vehicle Expenses as a Business Expense in Canada?
Partially deductible based on business-use percentage. You can claim actual costs (fuel, insurance, maintenance, CCA) multiplied by the business proportion, or use CRA's per-kilometre rates (70 cents/km for the first 5,000 km of business travel, 64 cents/km after, for 2025). Passenger vehicles over CAD 36,000 have a CCA cost cap.
What Canada Revenue Agency (CRA) says
CRA allows motor vehicle expenses under Sections 18(1)(a) and 13 of the Income Tax Act. The deductible amount is either actual costs x business%, or the CRA per-km rate. Class 10 CCA applies at 30% declining balance for most vehicles. Class 10.1 applies to passenger vehicles costing more than CAD 36,000 (2024 prescribed amount), with the CCA deduction capped at that ceiling. Monthly lease cost deduction capped at CAD 1,050 per month (2024).
When you can claim
- Fuel, oil, and operating costs proportionate to business kilometres driven
- Auto insurance premiums in proportion to business use
- Repairs and maintenance in proportion to business use
- CCA (Class 10 at 30%) on the vehicle cost in proportion to business use
- Per-km rate instead of actual costs (2025: 70 cents/km for first 5,000 km, 64 cents/km after)
When you cannot claim
- Commuting from home to a regular fixed place of business (this is personal travel)
- Personal-use portion of all vehicle expenses
- Fines and penalties
- CCA deduction on the cost portion of a passenger vehicle above CAD 36,000
Good to know
Pro tip: Keep a contemporaneous mileage log recording the date, destination, purpose, and kilometres for every business trip. CRA can deny the motor vehicle deduction entirely without adequate records. The per-km rate is simpler to administer and removes the need to apportion actual costs.
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