Entrepreneurship & Small Business

Car allowance per-kilometre? Or deduct % of business use on all car expenses?

  • Last Updated:
  • Jul 12th, 2016 8:48 pm
Apr 26, 2010
234 posts

Car allowance per-kilometre? Or deduct % of business use on all car expenses?

Hey guys!

I'm going to lease a new car (Subaru Forester 2017) in the next few days.

The car will be used 75% for my business.

I was going to deduct 75% off all car expenses (lease monthly payments, maintenance, fuel, etc.) as expenses but the dealer mentioned it would be more advantageous to "pay myself" using a per-kilometer car allowance of ~50 cents/km.

My business is a sole proprietorship.

Anyone on this board ever used this method?
Can I still use this method if I lease the car (versus buying it up-front)?

1 reply
User avatar
Dec 6, 2014
31 posts
1 upvote
Stoney Creek, ON
Claiming auto expenses.
First you have to calculate your business driving Km. When you get the car write down the Km mileage #. Then on December 31st write down that Km #. The difference is your total Km driving, personal and business. You're a sole prop so your fiscal year is January to December.
Then you need to keep a log of business driving. Theres prob an app for that. You divide the total Km into the business Km and that gives you your percentage to claim on the expenses.

Expenses are gas, repairs/maintenance, insurance, license/registration fees.
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... u-eng.html

Leasing Costs
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... s-eng.html

And there ya go, easy peasy.