Vehicle and Mileage Claims

Your work truck or van is one of the biggest deductions in the trade, and one of the most audited. A self-employed tradesperson claims actual vehicle costs, the real fuel, insurance, maintenance, interest and capital cost allowance, multiplied by the business-use percentage from a mileage logbook. There is a separate per-kilometre rate the CRA uses for reimbursing employees, which for 2026 is 73 cents for the first 5,000 km and 67 cents after that, but a sole proprietor's own vehicle is claimed on the actual-cost method, not by the per-km rate. Whichever way the numbers run, no logbook means no defensible claim.‍‌‌​​​​​​​​‌​​‌‌‌‌​​‌‌‌‌‌‌​‌​​‌‌‌‍

Per-kilometre rate versus actual cost

There are two different things people lump together.

• The per-kilometre reasonable allowance is the rate a business can pay an employee, tax-free, for using their own vehicle for work. For 2026 it is 73 cents per km for the first 5,000 km and 67 cents per km beyond that, plus an extra 4 cents per km in the Northwest Territories, Nunavut and Yukon (so 77 cents and 71 cents there). This is the rate you use if you have employees, or to reimburse yourself from your own corporation.
• The actual-cost method is how a sole proprietor claims their own vehicle. You add up every real cost of running the vehicle for the year and claim the business-use share of it.

For a sole proprietor with a personally owned vehicle, the actual-cost method is the route. Either way, you need a logbook recording business kilometres against total kilometres, because the business-use percentage drives the whole claim.

What actual costs include

On the actual-cost method you total and pro-rate by business use:

• Fuel and oil
• Insurance and licensing
• Maintenance and repairs
• Loan interest, subject to the cap below
• Lease payments, subject to the cap below
• Capital cost allowance on the vehicle

If 70 percent of your kilometres are business, you claim 70 percent of those running costs.

The 2026 vehicle expense limits

The CRA caps two of these costs, regardless of how expensive your vehicle is:

• Loan interest: deductible up to $350 per month.
• Lease payments: deductible up to $1,100 per month (before tax).

These ceilings apply for 2026. A pricey truck on finance does not let you write off unlimited interest or lease cost; the deduction is capped at these monthly figures and then further reduced to your business-use percentage.

The Class 10.1 cap on capital cost allowance

When you own the vehicle, you claim its cost over time through capital cost allowance (CCA), not all at once. Which class it falls into matters:

• Class 10 (30 percent): most work vehicles, and passenger vehicles costing $39,000 or less before tax. All vehicles in the class are pooled together.
• Class 10.1 (30 percent): passenger vehicles costing more than $39,000 before tax. The cost you can claim CCA on is capped at $39,000 for vehicles bought on or after January 1, 2026. Each Class 10.1 vehicle sits in its own separate class.

So if you buy a $60,000 passenger truck, your CCA is calculated as if it cost $39,000, not $60,000. The half-year rule applies in the year of purchase, meaning you claim only half the normal CCA that first year. Class 10.1 also does not allow a terminal loss on disposal, a quirk worth knowing before you sell.

Note that a genuine cargo van or a pickup used mostly to haul tools and materials can fall into Class 10 as a motor vehicle rather than a capped passenger vehicle, which avoids the $39,000 ceiling. The classification turns on seating and how the vehicle is used, so confirm it with your accountant.

Worked example: a $45,000 truck, 80 percent business

A tradesperson buys a $45,000 passenger truck, used 80 percent for business:

• CCA: the cost is capped at $39,000 (Class 10.1). First-year CCA is 30 percent of $39,000, halved by the half-year rule, which is $5,850. The business share at 80 percent is $4,680.
• Running costs: say $9,000 of fuel, insurance and maintenance for the year. The business share at 80 percent is $7,200.
• Interest: if financed, the deductible interest is capped at $350 per month, then taken at 80 percent business use.
• The logbook showing 80 percent business kilometres is what makes all of this stand up.

Common mistakes

• No logbook. The single most common reason a vehicle claim is denied. Record business and total kilometres all year; a sample period can support a full year only if your pattern is consistent.
• Claiming 100 percent business. Almost no tradesperson's vehicle is purely business. Commuting from home to a regular base is generally personal.
• Ignoring the interest and lease caps. $350 a month for interest and $1,100 a month for a lease are hard ceilings for 2026.
• Forgetting the $39,000 CCA cap. A luxury truck does not give a luxury write-off; Class 10.1 caps the cost.
• Mixing the methods. A sole proprietor claims actual costs, not the per-km rate. The per-km rate is for reimbursing employees.

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