Vehicle expenses – the tax auditor’s pot of gold!

Vehicle expenses are routinely audited by CRA, often with great results for the auditor, and poor results for the taxpayer.  Vehicle expenses are included in moving or medical expenses or northern residents deductions, and as a deduction on business income statements.   In order to deny the CRA auditor his or her pot of gold, keep your receipts for all vehicle expenses as well as a log of kilometers driven for moving, medical or business reasons.   It’s not that hard to do, and it will save you lots of tax in the event you are audited.   Call us, and we’ll explain.

Vehicle expenses include:

  • Operating expenses such as fuel, oil, tires, licence fees, insurance, maintenance, and repairs.
  • Ownership expenses such as depreciation, provincial tax, and finance charges.

For moving and medical expense claims, you may be able to use the simplified method to determine the amount you can claim for vehicle expenses.  The number of kilometers driven for moving or medical reasons is multiplied by a specified cents/km rate.  Although you do not need to keep detailed receipts for actual expenses if you choose to use the simplified method, you may still be asked to provide some documentation to support your claim, and you must keep track of the kilometers driven.  The 2012 rates range from a low of $.45/km for Saskatchewan to $ .615 for the Yukon.  BC’s rate was $.495 and Alberta’s was $.50.  The rates for 2013 will not be released by CRA until early 2014.

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