T2125 Vehicle Expenses
How to Claim Vehicle Expenses
on Your T2125
The actual expense method for Canadian sole proprietors. What you can claim, what CRA requires, and how to calculate your deduction correctly.
The Two Methods
CRA allows two methods for claiming vehicle expenses on your T2125. The first is the flat per-kilometre rate (commonly called the mileage rate). The second is the actual expense method. Most self-employed Canadians get a larger deduction using the actual expense method.
The 73 cents/km rate is for employees -- not self-employed
The CRA per-kilometre rate (73 cents/km for the first 5,000 km in 2026) is the employee benefit rate used for reimbursements. Self-employed Canadians filing T2125 use the actual expense method on Chart A -- not the per-kilometre rate. Many bookkeeping apps get this wrong.
The Actual Expense Method (Chart A)
Chart A on your T2125 calculates your vehicle deduction using this formula:
Business-use % x Total Vehicle Costs = Your Deduction
Business-use % = Business KM / Total KM driven in the year
Example: You drove 20,000 km total in 2026. 4,000 km were for business. Your business-use percentage is 20%. If your total vehicle costs were $8,000, your deduction is $1,600.
What Costs You Can Claim
The following vehicle costs are eligible for the actual expense method on T2125 Chart A:
🛡️
Insurance
Your full annual auto insurance premium. If you pay monthly, add up all 12 months.
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Fuel
All gas and diesel receipts for the vehicle. Keep every receipt -- CRA can ask for them.
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Maintenance and repairs
Oil changes, tire replacements, brake jobs, tune-ups, and any other repair costs.
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Loan interest
Interest paid on your vehicle loan. Note: the principal repayment is not deductible, only the interest portion.
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Registration and licensing
Annual vehicle registration fees and licence plate renewals.
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Parking and tolls
Business-related parking and toll fees. Commuting from home to a fixed office does not count.
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Leasing costs
If you lease your vehicle, the lease payments (up to CRA limits) are eligible instead of depreciation.
The KM Logbook Requirement
CRA requires you to keep a logbook of all business trips to support your vehicle expense claim. Without a logbook, CRA can deny your entire vehicle deduction on audit.
Your logbook must record for each business trip:
You also need to record your total odometer reading at the start and end of each year. This is how CRA verifies your total kilometres driven.
What Does NOT Count as Business Use
Not all driving counts as business use. CRA is strict about this.
xCommuting from home to your regular fixed office or place of work
xPersonal errands, grocery runs, or driving for personal reasons
xDriving to a gym or personal appointments
xVacation or leisure driving
Common Mistakes to Avoid
Common mistake
Using the 73 cents/km employee rate on T2125
Use Chart A actual expenses. The per-km rate is for employees, not self-employed filers.
Common mistake
Claiming 100% business use without documentation
If you use the same vehicle personally and for business, you must prorate. Very few vehicles qualify for 100% business use.
Common mistake
No logbook or incomplete logbook
Keep a logbook every trip, all year. CRA can deny the full deduction without one.
Common mistake
Missing receipts for fuel and maintenance
Keep every receipt. Snap a photo immediately. CRA audits ask for supporting documents.
Common Questions
Can I claim vehicle expenses if I work from home?
Yes. If you drive from your home office to visit clients, attend meetings, or pick up supplies, those trips count as business use. Your home must be your principal place of business.
I use my vehicle for both personal and business use. How do I split it?
Track all your kilometres for the year. Divide your business kilometres by your total kilometres. That percentage applies to all your vehicle costs. For example, 8,000 business km out of 25,000 total = 32% business use.
Do I need to keep paper receipts or can I use photos?
CRA accepts digital copies of receipts as long as they are legible and complete. A clear photo of a receipt saved to a secure location is acceptable.
What if I just started tracking partway through the year?
You can only claim the portion of the year you have documented. If you started your logbook in April, you can claim April through December. Reconstruct what you can from calendar entries and bank statements, but incomplete records put you at risk on audit.
Can I claim vehicle expenses for an Uber or DoorDash vehicle?
Yes. Rideshare and delivery drivers can claim actual vehicle expenses on T2125. Every kilometre driven for deliveries or passengers counts as business use. Keep your trip records from the app as supporting documentation.
Track Your Vehicle Expenses with SnapBooks
SnapBooks includes a KM logbook and automatically calculates your T2125 Chart A vehicle deduction using the actual expense method. Log every trip, snap fuel and maintenance receipts, and export a 5-sheet Excel file your accountant can use directly.
Try SnapBooks free15 receipts free. No credit card required. Not affiliated with the CRA.