As a Canadian driver, keeping track of your mileage is important for tax purposes. If you use your vehicle for business purposes, you may be able to deduct the mileage expenses on your taxes. But how do you accurately log your mileage? Here’s everything you need to know about mileage logging.
What is Mileage Logging?
Mileage logging is the process of keeping track of the distance you drive for business purposes. This includes driving to and from meetings, driving to pick up supplies or equipment, and other work-related driving. You need to keep a detailed record of the distance you drive, as well as the date, purpose, and location of each trip.
Why is Mileage Logging Important?
Mileage logging is important because it helps you accurately calculate your mileage expenses for tax purposes. If you use your vehicle for business purposes, you may be able to deduct your mileage expenses from your taxes. This can include expenses such as gas, oil changes, and other maintenance costs.
Keeping accurate mileage records can also help you avoid an audit from the Canada Revenue Agency (CRA). If you are audited and cannot provide detailed mileage records, you may be at risk of having your deductions denied, or worse, being charged with tax evasion.
How to Log Your Mileage
There are several ways to log your mileage, but the most accurate method is to use a mileage tracking app. These apps use your phone’s GPS to automatically track your mileage and record the purpose and location of each trip. Some popular mileage tracking apps for Canadians include MileIQ, QuickBooks Self-Employed, and TripLog.
If you prefer to keep track of your mileage manually, you can use a paper logbook or a spreadsheet. In your logbook or spreadsheet, you should record the date, purpose, location, starting odometer reading, ending odometer reading, and total distance driven for each trip.
Tips for Accurate Mileage Logging
To ensure your mileage logs are accurate and up-to-date, follow these tips:
- Log every trip – even if it’s a short distance or you think it’s insignificant.
- Be specific about the purpose of each trip – note whether it was for a meeting, picking up supplies, or any other work-related purpose.
- Record the starting and ending odometer readings – this is the most accurate way to calculate the distance driven.
- Keep track of tolls, parking fees, and other expenses – these can also be deducted from your taxes.
- Keep your mileage logs up-to-date – don’t wait until the end of the year to start logging your mileage.
In conclusion, mileage logging is an important part of managing your business expenses as a Canadian driver. By keeping accurate mileage records, you can ensure that you are claiming all the deductions you are entitled to, while also avoiding an audit from the CRA. Use a mileage tracking app or keep a manual logbook to track your mileage, and follow the tips above to ensure your logs are accurate and up-to-date.