Can I Write Off a Car for My Business?

If you run a business and use your vehicle for work, you’ve probably asked yourself, “can I write off a car for my business?” The short answer is yes — but with specific rules. Tax authorities allow you to deduct some of the costs of owning or operating a vehicle, but only for the portion used to earn business income. Personal use is never deductible.

This guide explains how business vehicle write-offs work, what expenses qualify, and the steps you need to take to claim them properly.

Business Use of a Car

You can deduct expenses when your car is used for business-related activities, such as:

• Driving to client meetings
• Picking up supplies or equipment
• Delivering products or services
• Traveling between worksites

Personal trips, like commuting from home to a regular office, do not qualify. To support your claim, you must keep accurate mileage records showing the percentage of business use versus total use.

What Vehicle Expenses Can You Write Off?

When asking “can I write off a car for my business?”, it’s important to know which costs are eligible. Typical deductible expenses include:

• Fuel and oil costs
• Insurance premiums
• Repairs and maintenance
• Licence and registration fees
• Loan interest (for purchased vehicles, subject to limits for passenger cars)
• Leasing costs (for leased vehicles, also subject to limits)
• Electricity costs (for zero-emission vehicles)

In addition to these running costs, you may also claim Capital Cost Allowance (CCA) — the tax deduction for the depreciation of your vehicle over time.

How to Calculate Business Deductions

Since most vehicles are used for both business and personal purposes, you can only deduct the business portion. To calculate:

1. Track your total kilometres driven in the year.
2. Track your business kilometres driven.
3. Apply the formula:

Business kilometres ÷ Total kilometres × Total vehicle expenses = Deductible amount

Example:
If you drove 20,000 km in a year and 15,000 km were for business, and your total vehicle expenses were $10,000:

(15,000 ÷ 20,000) × $10,000 = $7,500 deductible.

Vehicle Types and Tax Rules

Not all vehicles are treated the same. For tax purposes, there are four categories:

1. Motor Vehicles – Trucks, vans, or SUVs used mainly for transporting goods or equipment.
2. Passenger Vehicles – Cars and small trucks designed mainly for carrying people. These have stricter limits on CCA, interest, and lease deductions.
3. Zero-Emission Passenger Vehicles (ZEPV) – Electric or hydrogen-powered passenger cars. Similar rules apply as passenger vehicles, but they fall into a special tax class.
4. Zero-Emission Vehicles (ZEV) – Fully electric or hydrogen vehicles, including trucks and vans, with additional incentives.

Passenger vehicles often face deduction caps, while work-specific vehicles like heavy trucks generally allow higher write-offs.

Logbook Requirements

To claim deductions, accurate record-keeping is essential. You must keep a logbook with details of every business trip:

• Date
• Destination
• Purpose of the trip
• Number of kilometres driven

A full logbook for the year is the most reliable. However, after one base year, you can use a simplified logbook — a three-month sample that reflects your usual business use, as long as it stays within 10% of the base year’s ratio.

Leasing vs. Owning

If you own the car:

• You can deduct fuel, insurance, maintenance, loan interest, and claim CCA.
• Interest claims for passenger vehicles are capped.

If you lease the car:

• You can deduct lease payments, insurance, and maintenance.
• Deduction limits apply depending on the car’s list price and tax rules.

Joint Ownership

If a vehicle is jointly owned (for example, by you and your spouse), deduction limits still apply. The total deduction claimed by all owners cannot exceed what a single owner could claim.

FAQs About Writing Off a Car for Business

Q1. Can I write off my entire car if I use it for business?
No. You can only deduct the percentage of expenses related to business use.

Q2. What’s the easiest way to track business use?
Keeping a logbook or using mileage-tracking apps helps maintain accurate records.

Q3. Can I deduct 100% of parking and insurance?
Parking fees for business activities and supplementary business insurance can be deducted in full.

Q4. Do electric vehicles qualify for write-offs?
Yes. Zero-emission vehicles and passenger vehicles have special tax classes with additional incentives.

Q5. What happens if I use multiple vehicles?
You must track and calculate expenses separately for each vehicle used in your business.

Final Thoughts

So, can I write off a car for my business? Yes — but only for the portion used for work, and within the limits set by tax authorities. The key to maximizing deductions is keeping detailed records, understanding vehicle categories, and applying the correct formulas. Whether you own or lease, your car can be a valuable business asset that reduces your taxable income when managed properly.