Motor vehicle logbook (CRA)

Buyers meet this when they test a target’s vehicle expenses, especially where one truck serves both the business and the owner. The CRA’s guide T4002 for self-employed income says motor vehicle expenses can be deducted only when they are reasonable and supported by receipts. For how personal costs show up in the books, see handling personal expenses before selling.

What the CRA says to record

The guide says to list the date, destination, purpose and kilometres of each trip and to record each vehicle’s odometer reading at the start and end of the fiscal period. It also describes a simplified approach: a full logbook for one year to set a base year, then a shorter sample in later years if use stays in the same range. Section 230 of the Income Tax Act separately requires a person carrying on business to keep records and books of account. The guide is written for self-employed income, so ask an adviser how it applies to a corporation’s vehicles.

What to ask

• Logbooks or trip records for each vehicle behind a claimed expense, for each year in question
• Odometer readings at the start and end of each fiscal period
• Whether the simplified approach is used, and the base-year logbook if so
• The dates and odometer readings when vehicles were bought, sold or traded, which the guide says to record