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info@pyc.net |
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info@pyc.net |
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Keeping Track of Vehicle Expenses If you use your own or a company vehicle for business or employment purposes, it is important to keep careful track of the related expenses that you may claim for income tax purposes. The 2003 Budget introduced new rules relating to
automobile benefits. As a result, many individuals who are provided with a vehicle by
their employer may benefit if more than 50% of the usage is business-related and they
travel less than 20,000 kilometres in a year for personal purposes. However, to benefit
from this change, the CCRA will require documentation of personal versus business use of
automobiles. One of the best ways to keep complete and proper records is through the use
of an automobile log that you can keep in the glove compartment of your car. A recent court case underscores how using an
automobile log can minimize your potential tax liability and help you avoid unnecessary
assessments. Because the taxpayer could not provide any demonstrable evidence relating to
his actual usage of the company-owned vehicle, the CCRA assessor made an estimate based
upon assumptions that resulted in a very unfavourable assessment to the taxpayer. While the taxpayer was ultimately successful in
overturning this assessment, the judge commented: "It is unfortunate that [the taxpayer] did not keep a log recording his personal use of the truck in the years under appeal, as that would have negated the need for this litigation." When you use your employer’s car, you will
need a record of the kilometres driven for business purposes. If you use your car for
business, you will also need a record of your expenses. You should keep an automobile log
in which you record: • the total kilometres that you drove • records of any business trips, including date, destination, purpose and total kilometres • the odometer reading of your car at the beginning and end of every tax year. If you change vehicles during the year, be sure to record the odometer readings at that point as well, and • receipts for fuel, lubricants, car washes,
motor oil and other car-related expenses, which are deductible in proportion to the use of
the car for business purposes. Whether you lease or own your vehicle, be sure to
keep daily records of your usage. In particular, note the details of each trip, including
such information as the name of the person you saw and the purpose of your visit; for
example, "to customer/supplier [name] for a business visit" and "to/from
the cottage" for personal use of your automobile. Write down amounts paid for parking
and keep the receipts. A Fresh Start If, like many, you jot down your automobile
expenses in your day planner and throw receipts into your glove compartment, you likely
find yourself scrambling at the end of each year to pull together the documentation of the
automobile expenses that you can claim. Maybe it’s time to try a different strategy. The new year is an opportune time to start keeping these records in an automobile log so that your chartered accountant can help you maximize the allowable deductions for the business use of your vehicle.
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