Business Basics: Mileage logbook & CRA requirement
There is a lot to cover in this topic so let's drive Intuit (Pun intended). CRA has requirements that must be followed. Let’s take a deeper look at those requirements and how they may differ depending on which reporting method you choose.
The logbook method: Recording your mileage in a logbook is the best evidence to support your claim for business expense according to the CRA. Using a full logbook method, you must keep a record of your total KM’s as well as every business-related drive, so a breakdown of every KM you drive of both person and business driving. You will need the following information Date, Destination, purpose, the number of KM’s driven, and of course the odometer reading at the start and the end of the year or fiscal period. Finally, if you use more than one vehicle for business purposes, remember to record the KM’s for both Vehicles separately.
The Simplified method: Once you have a full 12 months of driving for both business and personal records in a logbook, you can use that year to establish what is called a base year for your business usage. When the base year has been established you can then use 3 months sampled for the current year to forecast your business usage for the entire year. The requirements for what you need to record are the same as for the full logbook method.
The Automobile allowance rate: To claim a deduction or reimbursement using this method you simply need to record all KM’s driven for business. Once again for any trip logged as business-related trips, you’ll need to note the following date, destination, purpose, and number of KMs driven. Although you don’t need to provide written evidence, you will need to show that you have actually driven the KM’s being claimed. Using an automatic logbook application or excel sheet diary records of work-related driving are 2 standard ways to provide such information. You can do this by downloading an app such as Mile IQ or by something as simple as using an excel google sheet.
Find the method that works best for you and start logging your trips consistently. CRA will accept all paper, diary, account book, digital spreadsheets, CSV files, PDF files, and XLSX (Microsoft Excel). So, in short, the format does not matter as long as the right records are kept and present.
Until Next Time,