To claim vehicle expenses for a side hustle in Canada, keep a mileage log that records the date, destination, purpose, and kilometres of every business trip, plus your odometer readings at the start and end of the year. The CRA lets a self-employed person deduct only the business part of vehicle costs, and the log is how you prove that percentage. The CRA calls a full-year logbook “the best evidence” on its motor vehicle records page.
If you drive for delivery or rideshare apps, vehicle expenses for delivery and rideshare drivers covers app-specific issues such as kilometres between orders. This guide is for every other side hustle that uses a car: handyman work, house cleaning, event photography, client meetings, and supply runs. It fits with side hustle expense deductions and record-keeping.
What does the CRA require in a mileage log in Canada?
For each business trip, the date, destination, purpose, and number of kilometres driven, plus the odometer reading at the start and end of your fiscal period. Those four trip fields and the odometer readings come straight from the CRA’s motor vehicle records page. If you change vehicles during the year, record the dates and odometer readings when you buy, sell, or trade.
A simple log can be a notebook in the glovebox, a spreadsheet, or an app. A spreadsheet layout that matches the CRA’s list:
| Date | Start location | Destination | Purpose | Km |
|---|---|---|---|---|
| Oct 6 | Home | Client, 14 Elm St. | Install shelves (invoice 1042) | 18 |
| Oct 6 | Client | Hardware store | Supplies for invoice 1042 | 6 |
| Oct 6 | Hardware store | Home | Return | 13 |
Writing the invoice or job number in the purpose column ties the trip to income, which makes the log easier to defend.
How do you calculate the business-use percentage of a vehicle?
Divide business kilometres by total kilometres for the year, then apply that percentage to your vehicle costs. The CRA says that if you use a vehicle for business and personal use, you can deduct only the part of the expenses you paid to earn income (CRA).
Illustrative example
These are assumed numbers, not CRA figures. A side hustler’s odometer shows 20,000 km driven in the year, and the log shows 5,000 business km.
- Business use: 5,000 ÷ 20,000 = 25%
- Assumed vehicle costs for the year: fuel $2,400 + insurance $1,800 + maintenance $800 + licence $120 = $5,120
- Deductible share: $5,120 × 25% = $1,280
- Business parking paid in the year: $90, deductible in full
- Total vehicle expense claimed (before CCA): $1,280 + $90 = $1,370
Which vehicle expenses can a side hustler deduct in Canada?
The CRA’s deductible expenses list includes licence and registration fees, fuel and oil, electricity for zero-emission vehicles, insurance, interest on money borrowed to buy the vehicle, maintenance and repairs, and leasing costs. These go on line 9281 of Form T2125, while capital cost allowance (CCA) goes on line 9936.
Two items are deductible in full rather than by percentage: parking fees related to your business activities and supplementary business insurance (CRA). Passenger vehicles have limits on CCA, interest, and leasing costs; the CRA’s type of vehicle page explains which vehicles count as passenger vehicles.
How does the CRA’s simplified logbook work?
After keeping a full logbook for one complete 12-month base year, you can keep a three-month sample log in later years, as long as the result stays within 10% of the base year (CRA).
Step 1: Keep a full log for 12 months
This is your base year. Note the business-use percentage for each quarter as well as for the full year.
Step 2: In a later year, log a three-month sample
Pick any three months and log every trip.
Step 3: Apply the CRA formula
(Sample period % ÷ Base year same-period %) × Base year annual % = Calculated annual business use.
The CRA’s own example: a base year with quarterly business use of 52%, 46%, 39%, and 67% and an annual figure of 49%. A later April-to-June sample shows 51%, against 46% for the same months in the base year. (51 ÷ 46) × 49% = 54%, which the CRA would accept because it is within 10 points of 49% (between 39% and 59%).
Step 4: Start a new base year if usage shifts
If the calculated figure moves more than 10%, the CRA says the sample is only reliable for its three months and you should consider a new 12-month base year. Keep the base-year logbook for six years from the end of the last tax year it is used for.
What mistakes do side hustlers make with mileage logs?
The biggest is reconstructing the log at tax time from memory.
- No odometer readings. Without start and end readings you cannot show total kilometres.
- Claiming 100% business use of a family car. The claim must match the log.
- Leaving out the purpose. “Errand” does not show a business reason; a client or job reference does.
- Mixing two vehicles in one log. The CRA wants a separate record for each vehicle.
- Throwing away fuel and repair receipts. The log proves the percentage; receipts prove the costs. See record-keeping.
How do vehicle expenses fit into your side hustle taxes in Canada?
They reduce your net self-employment income on Form T2125, which lowers both income tax and CPP contributions. Claim them in Chart A of the form, keep the log and receipts for six years, and include the result when you report your side hustle income. Tax software such as Wealthsimple Tax TODO-AFFILIATE walks through the T2125 vehicle section, and a phone mount or dash notebook from Amazon.ca TODO-AFFILIATE makes the logging habit easier.
This is not tax, legal, or insurance advice.
Which guides sit next to tracking mileage for the CRA?
Vehicle expenses for delivery and rideshare drivers, side hustle expense deductions, home office expenses, and free and cheap bookkeeping tools. Driving gigs are reviewed in the Amazon Flex review, Uber Eats courier review, Instacart shopper review, and TaskRabbit review.
What are the common questions?
What should a CRA mileage log include?
For each business trip, the date, destination, purpose and kilometres driven, plus the odometer reading at the start and end of the fiscal period. Keep a separate log for each vehicle.
Do I have to keep a mileage log every year?
After one complete 12-month logbook year, the CRA accepts a three-month sample log in later years if the calculated business use stays within 10% of the base year. Otherwise, keep a full log.
Can I deduct parking for my side hustle?
Yes. The CRA says you can deduct the full amount of parking fees related to your business activities, rather than only the business-use percentage.
How long do I keep my mileage log?
Generally six years from the end of the tax year it relates to. A base-year logbook used for the simplified method must be kept six years from the end of the last tax year it is used to establish business use.
Which line of Form T2125 are vehicle expenses on?
Motor vehicle expenses other than capital cost allowance go on line 9281, and capital cost allowance goes on line 9936.
Which sources support this guide?
The rules, rates, and platform requirements in this guide are checked against these primary sources. Retail price ranges are labelled as ranges to verify locally, and they are not quotes.
- Motor vehicle records — Canada Revenue Agency
- Motor vehicle expenses: deductible expenses — Canada Revenue Agency
- Motor vehicle expenses (not including CCA) — Canada Revenue Agency
- Type of vehicle — Canada Revenue Agency
- Motor vehicle expenses — Canada Revenue Agency