--- title: "CRA Mileage Rate 2026: 73 Cents/km, Logbooks, Vehicle Costs" url: https://www.everstonecpa.com/blog/vehicle-mileage-deductions-canada-business description: "Logbooks, per-km CRA rates, CCA limits and lease caps for 2026 — how Canadian business owners deduct vehicle and mileage costs correctly. Ask a CPA." type: guide updated: 2026-10-12 summary: "You can deduct the business-use share of vehicle costs, supported by a mileage logbook. For 2026, CRA’s reasonable per-kilometre allowance is 73 for the first 5,000 km and 67 after that (provinces)." faq_count: 7 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) Vehicle and Mileage Deductions for Business in Canada (2026) Tax # Vehicle & mileage deductions *for business (2026)* By EverStone CPA · Updated August 2026 · 9 min read Quick answer **Quick answer:** You can deduct the business-use share of vehicle costs, supported by a mileage logbook. For 2026, CRA’s reasonable per-kilometre allowance is **73 for the first 5,000 km and 67 after that** (provinces). If your corporation reimburses you at or below these rates, the payment is tax-free to you and deductible to the corporation — often simpler than claiming actual costs, which come with a $39,000 CCA cap, a $1,100/month lease cap, and a $350/month interest cap on financed vehicles for 2026. The 2026 reasonable per-kilometre rates. **Rather have a CPA handle this?** A CPA at EverStone replies with a straight answer and a fixed fee for your situation. [Get My Fixed Quote →](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form) ## Business-use vs. personal-use: the logbook is everything Every vehicle deduction starts with the same question: what percentage of your driving is for business? CRA wants that answer backed by a **mileage logbook** — date, destination, purpose, and kilometres for each trip, plus odometer readings at the start and end of the year. Commuting from home to a regular place of business is **personal**, not business, mileage, a common mistake. Keeping a full logbook every year is tedious, so CRA allows a **simplified (sample) logbook** once you’ve kept one full 12-month logbook in a base year: after that, a three-month sample logbook in a later year can be used to project your annual business-use percentage, as long as your driving pattern hasn’t materially changed. This is a real time-saver for anyone with a stable driving pattern year to year. ## Owned vehicle: what’s deductible If you (or your corporation) own the vehicle, the business-use percentage applies to: - Fuel - Insurance - Repairs and maintenance - Licence and registration fees - **[Capital cost allowance](https://www.everstonecpa.com/glossary#cca) (CCA)** — vehicles typically fall into Class 10 (30% declining balance) or Class 10.1 for higher-cost passenger vehicles, which is subject to a capital cost **ceiling of $39,000 before tax** for 2026 acquisitions. You can’t claim CCA on the portion of the vehicle’s cost above that ceiling - Loan **interest**, capped at **$350 per month** for 2026 for a new vehicle loan, prorated for business use **Using a vehicle for the business?** We set up the logbook, claim the business share and decide whether the company or you should own it, as part of the year-end at a fee quoted in writing. [Get a quote](https://www.everstonecpa.com/book-online?service=corporate-tax#enquiry-form). [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=corporate-tax#enquiry-form) ## Leased vehicle: the deduction cap If you lease instead of buy, the deductible portion of your lease payments (before applying your business-use percentage) is capped at **$1,100 per month, before tax**, for new leases entered into in 2026. There’s also a separate formula that can further limit the deduction based on the manufacturer’s list price, so a lease on a high-end vehicle doesn’t always yield the full monthly cap — your accountant can run the actual formula against your lease terms. Not sure how this applies to you? Every corporation’s situation is different. Send an enquiry to a CPA and get a straight answer, plus a fixed quote before any work starts. [Send an Enquiry →](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form) [See fixed fees](https://www.everstonecpa.com/pricing) ## The CRA per-kilometre allowance, and when it beats claiming actual costs Instead of tracking every fuel and repair receipt, many owner-managers have their corporation pay them a **per-kilometre allowance** for business driving done in a personally owned vehicle. For 2026, CRA’s prescribed reasonable rate is: CRA prescribed per-kilometre automobile allowance rates for 2026, provinces and territories | Region | First 5,000 km | Each additional km | | Provinces | 73 /km | 67 /km | | Territories (YT, NT, NU) | 77 /km | 71 /km | Paid at or below these rates and based on a genuine logbook of business kilometres, the allowance is **not taxable** to you and is fully deductible to the corporation — no CCA schedules, no lease-cap math, no receipts to track by category. The leasing, interest and capital cost ceilings that sit alongside these rates are set out on our note on the [2026 automobile deduction limits](https://www.everstonecpa.com/tax-update/automobile-deduction-limits-2026). For an owner who drives moderate business kilometres in an already-paid-off personal vehicle, this is often the simplest and most tax-efficient option. Higher-mileage drivers with an expensive or heavily financed vehicle sometimes come out ahead claiming actual costs instead — it’s worth running both numbers. **Watch the standby charge:** if your *corporation* owns or leases the vehicle and you use it personally, you’re taxed on a standby charge plus an operating-cost benefit for personal kilometres, calculated under CRA’s prescribed formulas and added to your T4 income. This is why many owner-managers prefer to own the vehicle personally and simply invoice the corporation per kilometre — it sidesteps the [taxable-benefit](https://www.everstonecpa.com/glossary#taxable-benefit) calculation entirely. ## Which route makes sense for you? The right choice depends on how many business kilometres you drive, whether the vehicle is owned or leased, its value, and whether it’s registered to you or the corporation. Contractors and tradespeople running work trucks often benefit from claiming actual costs given higher mileage and specialized vehicles; consultants and salespeople with a personal vehicle and moderate driving often do better on the per-kilometre allowance. We work through both scenarios with clients in our [trucking](https://www.everstonecpa.com/accountant-for-truckers) and [real estate](https://www.everstonecpa.com/accountant-for-realtors) practices regularly. ## Record-keeping checklist - A logbook (full-year or CRA-compliant sample logbook) showing date, destination, purpose, kilometres - Odometer readings at the start and end of the tax year - Receipts for fuel, insurance, repairs, licensing (if claiming actual costs) - Lease or loan agreement, if applicable, to apply the correct caps ## The bottom line Track your kilometres properly, know the current caps and rates, and choose the deduction method — actual costs or a per-kilometre allowance — that fits your driving pattern and vehicle. Rates and dollar limits are reviewed annually, so confirm current figures before year-end. Good bookkeeping habits make this painless; see our related post on [common bookkeeping mistakes](https://www.everstonecpa.com/blog/bookkeeping-mistakes-small-business) for more, or talk to a CPA about setting up the right vehicle deduction for your business. Costs incurred once you are away from the vehicle — flights, hotels and meals — follow the separate rules for [business travel expenses](https://www.everstonecpa.com/blog/travel-expenses-business-canada-cra). This article is general information, not tax advice — confirm your specific rates and situation with EverStone CPA. Sources - [Canada Revenue Agency — Small businesses and self-employed income](https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income.html) - [Canada Revenue Agency — Forms and publications](https://www.canada.ca/en/revenue-agency/services/forms-publications.html) About this article **EverStone CPA** Prepared and reviewed by a Chartered Professional Accountant at EverStone CPA, a CPA firm working with small and midsized businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form) Working through this locally? We advise owners on it as an [accountant in Surrey](https://www.everstonecpa.com/accountant-surrey). If the company owns the vehicle instead, the [automobile benefit calculator](https://www.everstonecpa.com/vehicle-benefit-calculator) shows the standby charge and operating benefit. ### Related articles [Accountant for truckers →](https://www.everstonecpa.com/accountant-for-truckers) [Accountant for realtors →](https://www.everstonecpa.com/accountant-for-realtors) [Tax services →](https://www.everstonecpa.com/tax-services) [Bookkeeping mistakes to avoid →](https://www.everstonecpa.com/blog/bookkeeping-mistakes-small-business) [CCA classes explained →](https://www.everstonecpa.com/blog/capital-cost-allowance-cca-classes-canada)[Company car vs allowance →](https://www.everstonecpa.com/blog/company-car-taxable-benefit-canada) [Free mileage and vehicle log →](https://www.everstonecpa.com/mileage-and-vehicle-log) [When the vehicle claim gets a review letter →](https://www.everstonecpa.com/cra-letter-t1-review) FAQ ## Frequently asked questions **Do I need a logbook to claim vehicle expenses?** Yes. CRA expects a mileage logbook recording the date, destination, purpose and kilometres driven for each business trip, plus your odometer reading at the start and end of the year. Once you keep a full logbook for one base year, CRA’s simplified logbook method lets you use a shorter three-month sample logbook in later years to support the same business-use ratio, provided usage stays consistent. **What is the 2026 CRA per-kilometre rate for a reasonable allowance?** For 2026, the CRA prescribed rate for a reasonable per-kilometre allowance is 73 cents per kilometre for the first 5,000 kilometres and 67 cents for each additional kilometre, in the provinces (4 cents higher in the territories). These rates set the ceiling for a tax-free allowance an employer can pay without it becoming a taxable benefit. **Should my corporation own the vehicle or should I own it personally and get reimbursed?** It depends on business-use percentage and vehicle value. If usage is mostly business, corporate ownership can work, but it triggers standby-charge and operating-benefit rules on any personal use. Many owner-managers find it simpler to own the vehicle personally and have the corporation pay a per-kilometre allowance for business use, avoiding the taxable-benefit calculation entirely. **Is there a cap on CCA and lease deductions for an expensive vehicle?** Yes. For zero-emission-eligible passenger vehicles acquired in 2026, CRA caps the capital cost allowance base at $39,000 before tax regardless of the purchase price, and caps deductible lease payments at $1,100 per month before tax for new leases. Interest on a vehicle loan is also capped, at $350 per month, for 2026. **What happens if my corporation owns the vehicle and I use it personally?** You’re taxed on a standby charge (based on the vehicle’s cost or lease cost) plus an operating-benefit amount for personal kilometres driven, unless business use is high and personal use is limited. These taxable benefits are calculated using CRA’s prescribed rates and added to your T4 income, so an employer-owned vehicle with meaningful personal use is rarely tax-efficient for an owner-manager. **Is driving from home to a regular workplace business mileage?** No. Commuting between home and a regular place of business is personal driving, and including it is one of the most common logbook errors. Trips between job sites, to clients, or to suppliers during the working day generally do count. The distinction matters because it feeds directly into the business-use percentage applied to every vehicle cost you claim. **Do I have to keep a full logbook every year?** Not necessarily. Once you have kept a complete twelve-month logbook in a base year, CRA allows a three-month sample logbook in later years to project your annual business-use percentage, provided your driving pattern has not materially changed. That is a genuine time-saver for a stable pattern, but the full base-year logbook has to exist first. ## Not sure which vehicle deduction saves you more? Tell us who owns the vehicle and how it is used. A CPA replies by email within one business day with the better setup and a fixed fee. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form)[Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) **Run your own numbers with the free calculators:** [compare salary against dividends](https://www.everstonecpa.com/salary-vs-dividends-calculator) · [check when your T2 is due](https://www.everstonecpa.com/t2-deadline-calculator) · [check whether instalments apply to you](https://www.everstonecpa.com/tax-instalment-calculator) [← Vacation pay rules for employers: accrual, pay-as-you-go and the year-end treatment](https://www.everstonecpa.com/blog/vacation-pay-rules-canada-employers) [Fixing past returns: how CRA’s Voluntary Disclosures Program works →](https://www.everstonecpa.com/blog/voluntary-disclosures-program-canada-fixing-past-returns) ## Have a question about this? Ask it free through [the quick-question form](https://www.everstonecpa.com/quick-question) and a CPA replies by email within one business day. For something that needs a proper look, a one-off **Advice Call** is a paid 45-minute session with a Chartered Professional Accountant: $225 plus GST, booked by email or phone with a secure payment link. It is credited against your first invoice if you become a client within 60 days. Looking for an accountant to take this on rather than an answer? [Send an enquiry](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form). [Ask a Free Question](https://www.everstonecpa.com/quick-question) [Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) Email info@everstonecpa.com ★★★★★ “…We switched to him last year for both our personal and small-business taxes — responsive, knowledgeable and quick.” Heather Powers · Google review --- Source: https://www.everstonecpa.com/blog/vehicle-mileage-deductions-canada-business Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online