Claiming Mileage as an employee in Canada? Here are some helpful tips.
Claiming vehicle expenses as an employee in Ontario for tax purposes involves specific criteria and documentation. Here's a general guideline:
Eligibility: First, you must be required to use your personal vehicle for work purposes. This does not include commuting from home to work. Your employer must also certify this requirement, usually with a signed T2200 form (Declaration of Conditions of Employment).
Maintain a Logbook: Keep a detailed logbook of all your work-related trips. This should include dates, destinations, the purpose of each trip, and the number of kilometers driven for work. It's crucial to differentiate between personal and business use. I use MileIQ - it’s a simple App that allows you to swipe left for personal mileage and right for business. Every drive is properly tabulated to CRA specifications.
Collect Receipts: Gather all receipts related to your vehicle expenses. This includes fuel, maintenance and repairs, insurance, license and registration fees, and leasing costs (if applicable).
Calculate Business Use Percentage: At the end of the tax year, calculate the percentage of your vehicle's use that was for work purposes. This is done by dividing the business kilometers driven by the total kilometers driven in the year.
Calculate Deductible Expenses: Apply the business use percentage to your total vehicle expenses to determine the deductible amount.
Complete Your Tax Return: On your personal income tax return, claim these expenses on line 22900 – Other Employment Expenses. You'll need to complete Form T777 – Statement of Employment Expenses to calculate and support your claim.
Keep your T2200 Form: You must have a completed and signed T2200 form from your employer to validate your claim. You don't need to submit this form with your tax return but must keep it in case the Canada Revenue Agency (CRA) asks to see it.
File Your Tax Return: Submit your tax return to the CRA, with the vehicle expenses included in your calculations.
Record Retention: Keep your logbook, receipts, and T2200 form for at least six years, as the CRA may request them for verification purposes.
It's important to stay updated with the CRA guidelines, as tax laws and regulations can change. If you are unsure or your situation is complex, consider consulting a tax professional for personalized advice.