CRA Mileage Logbook Requirements for Sole Proprietors (2026–2027)

Short answer: Under CRA mileage logbook requirements, a Canadian sole proprietor claiming motor vehicle expenses on Form T2125 (Line 9281) must keep an odometer logbook recording the date, destination, business purpose, and kilometres driven for every business trip, plus the vehicle’s opening and closing odometer readings for the calendar year. Once you keep a complete 12-month base-year logbook, the CRA allows you to use a 3-month sample logbook in later years if your annual business-use percentage stays within 10 percentage points of the base year, and all logbooks must be retained for 6 years.

⚡ Instant Canadian CRA Form T2125 Logbook & 73¢/67¢ Calculator ($CAD · $0 Free Core): Without a compliant odometer logbook (opening Jan 1 reading, trip destination + purpose, closing Dec 31 reading), a CRA auditor can disallow 100% of your T2125 Line 9281 fuel, insurance, lease, and CCA deductions + GST/HST/QST input tax credits ($5,500–$9,800+ lost per year). Use the Free Canadian Mileage & GST/HST Toolkit, click 🔗 Embed / CSV Template for a clean T2125 spreadsheet, save your first 5 records in the iCloud Web Workspace (5 Free Saves), explore the Business Mileage Logbook Edition, Canadian Contractor & T2125 Edition, and Consultant & Freelancer Edition, or Download Keel Free on the App Store ($0/mo Core · No 15-Trip Paywall) (ca-trades — keep using the web tools anytime, or log trips offline on iPhone).

Motor vehicle claims are one of the Canada Revenue Agency’s most frequently audited lines on Form T2125 (Statement of Business or Professional Activities). Unlike the United States — where a 1099 worker can simply multiply business miles by a flat IRS standard mileage rate without keeping gas receipts — an unincorporated Canadian sole proprietor generally claims the business-use percentage of their actual receipted vehicle costs under CRA motor vehicle record-keeping rules. Without a compliant logbook proving that percentage, a CRA auditor can disallow your fuel, insurance, maintenance, lease, and Capital Cost Allowance (CCA) deductions down to zero.

What must be in a CRA-compliant mileage logbook?

The Canada Revenue Agency states that the best evidence to support the use of a vehicle is an accurate logbook of business travel maintained for the entire year. Every entry in a compliant logbook must capture four trip details, bracketed by two annual odometer readings:

1. Opening odometer reading on January 1 (or the date you bought or started using the vehicle in your business during the year).
2. Date of each business trip.
3. Destination (city, client address, job site, or supplier location).
4. Purpose of the trip (for example, “Site measure and quote for J. Patel kitchen renovation” or “Pick up 3/4-inch PEX and fittings at Noble Trade”).
5. Number of kilometres driven for that specific business trip.
6. Closing odometer reading on December 31 (or the date you sold or switched vehicles).

From those numbers, you calculate your business-use percentage for Form T2125, Chart A:

$$\text{Business-Use Percentage} = \frac{\text{Total Business Kilometres in Logbook}}{\text{Closing Odometer} - \text{Opening Odometer}} \times 100$$

If you change vehicles partway through the tax year, the CRA requires you to record the odometer reading of each vehicle on the date of the switch and track the dates and kilometres separately. For the full list of deductible running costs that get multiplied by this percentage, see our Canadian self-employed vehicle expenses guide.

How does the CRA simplified 3-month sample logbook work?

Keeping a trip-by-trip logbook 365 days a year is the safest approach, especially for tradespeople whose job sites change weekly. However, the CRA offers an official simplified logbook policy once you have established a base year.

Requirement	Full 12-Month Logbook (Standard / Base Year)	Simplified 3-Month Sample Logbook (Subsequent Years)
Who can use it?	Every sole proprietor or partner claiming T2125 vehicle expenses	Only businesses that have already completed a full 12-month base year logbook
Trip logging period	All 12 months (January 1 to December 31)	One continuous 3-month sample period representative of the whole year
Annual odometer readings	Required on Jan 1 and Dec 31	Still required on Jan 1 and Dec 31 of the entire year
10% tolerance rule	Sets the baseline business-use percentage (e.g., 62%)	Calculated annual usage must stay within ±10 percentage points of the base year (e.g., 52% to 72%)
Fuel & repair receipts	Must still be kept for the entire 12-month year	Must still be kept for the entire 12-month year (not just the 3 sample months)

Worked example of the CRA’s ±10% formula

Suppose you kept a full 12-month base-year logbook in 2025:

• Total base-year business usage: 64%
• Sample 3-month period (April–June 2025) business usage: 60%

In 2026, you keep a 3-month sample logbook during April–June 2026 and record your full-year odometer readings (Total 2026 km = 25,000 km). During April–June 2026, your sample business usage is 66%. The CRA formula extrapolates your 2026 annual business use as:

$$\text{2026 Annual Business Use} = \frac{66% \text{ (2026 Sample)}}{60% \text{ (Base-Year Sample)}} \times 64% \text{ (Base-Year Annual)} = 70.4%$$

Because 70.4% is within 10 percentage points of your 64% base year (the acceptable corridor is 54% to 74%), the CRA accepts 70.4% as your 2026 business-use percentage on Form T2125 without requiring trip logs for the other nine months! Notice, however, that you must still keep your fuel, insurance, maintenance, and lease/interest receipts for all 12 months of 2026.

Can a Canadian sole proprietor just use the 73¢ / 67¢ per-kilometre rate on T2125?

This is the most common misconception among Canadian freelancers who read US tax blogs: no, an unincorporated sole proprietor cannot simply multiply kilometres by the CRA per-kilometre allowance rate to claim their T2125 tax deduction.

Here is what the CRA’s 2026 automobile allowance rates (73¢ per km for the first 5,000 km and 67¢ per km thereafter in the provinces; 77¢ per km and 71¢ per km in Yukon, NWT, and Nunavut) are actually used for:

1. Tax-free employee reimbursements (including incorporated owner-managers): If your business is incorporated (Inc. or Ltd.) and the corporation reimburses you as an employee/director for driving your personal vehicle on company business, the corporation can deduct that per-kilometre allowance and you receive it tax-free.
2. Invoicing clients for travel reimbursement: As an unincorporated sole proprietor, you can use the 73¢/67¢ per km rate on your customer invoices when billing a client for job-site travel. That billed travel reimbursement goes into your T2125 gross business income (plus GST/HST if you are a registrant), and you then deduct the business-use percentage of your actual receipted vehicle expenses (fuel, insurance, repairs, licensing, loan interest, lease, or CCA) on T2125 Line 9281.

Which trips count as business kilometres vs personal commuting under CRA rules?

The CRA draws a strict line between personal commuting and business travel:

• Home to a regular place of business (Personal): Driving from your home to an office, shop, or studio you rent outside the home is personal commuting and never counts as business kilometres — even if you carry tools in the trunk or take client phone calls on Bluetooth.
• Home-based business to client sites and suppliers (Business): If your principal place of business is your home office, trips from your home directly to customer homes, job sites, building supply yards, or client meetings are 100% business kilometres.
• Home to a point of call on the way to a regular shop (Business): If you have an external shop, driving directly from home to a customer job site or supplier before going to the shop counts as business travel.

How long must you keep your CRA mileage logbook and vehicle receipts?

Under Section 230(4) of the Income Tax Act, both your mileage logbook (including the original 12-month base-year logbook if you rely on the 3-month sample method!) and every fuel, repair, insurance, and bill-of-sale receipt must be kept for 6 years from the end of the last tax year to which they relate.

Wait — notice the base-year rule! If you use a 2023 full-year logbook as the base year to justify a 3-month sample logbook on your 2026 T1/T2125 return, you must keep that 2023 base-year logbook until at least December 31, 2032 (6 years after the end of the 2026 tax year). Full retention timelines are covered in our CRA 6-year record-keeping guide for sole proprietors.

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• Record every business trip with date, destination, purpose, and kilometres as you park, and store your Jan 1 / Dec 31 odometer readings.
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Frequently asked questions

What does ODO mean on a vehicle mileage logbook?

ODO is the standard abbreviation for odometer — your vehicle’s cumulative distance gauge showing the total kilometres (or miles) driven since manufacture. On a CRA-compliant mileage logbook, “Start ODO” and “End ODO” refer to the opening odometer reading on January 1 and the closing odometer reading on December 31 (plus trip start/end odometer readings if recorded), which establish your total annual vehicle kilometres for Form T2125 Chart A.

What happens if the CRA audits my vehicle expenses and I don’t have a logbook?

If the CRA reviews your Form T2125 Line 9281 claim and you cannot produce a contemporaneous mileage logbook, auditors routinely disallow the entire motor vehicle claim or cut the allowed business-use percentage to a minimal fraction. Credit card statements showing gas station purchases prove how much fuel you bought, not how many kilometres were driven for business versus personal errands. If your logbook has gaps, the CRA may only consider corroborating evidence such as dated client invoices, job calendars, and service-interval odometer readings on mechanic bills.

Does the CRA accept a digital or app-based mileage logbook?

Yes. The CRA accepts electronic and app-based mileage logbooks provided the records contain all required fields (opening/closing annual odometer readings, date, destination, business purpose, and kilometres for each business trip), are recorded at or near the time of the trips, and can be exported in an accessible, readable format (such as CSV or PDF) during a desk review or audit.

Do I need to keep gas receipts if I keep a CRA mileage logbook?

Yes — and this is the key difference between Canadian sole proprietors and US 1099 workers. On Form T2125, an unincorporated Canadian sole proprietor deducts the business-use percentage of their actual motor vehicle expenses (fuel, maintenance, insurance, licence/registration, eligible loan interest, lease costs, or Capital Cost Allowance), so you need both the mileage logbook (to prove the business percentage) and the receipts (to prove the total dollars spent).

Can I deduct parking fees and 407 ETR highway tolls on top of my vehicle percentage?

Business parking fees (such as meter parking at a client meeting or job site) are 100% deductible as business parking rather than being reduced by your general business-use percentage, provided the trip itself was for business. Electronic highway tolls (such as Ontario’s 407 ETR) incurred on specific business trips should be backed by your toll statement matched against the dates and destinations in your mileage logbook.

What is the 2026 CRA Capital Cost Allowance (CCA) ceiling for business vehicles?

For passenger vehicles (Class 10.1) purchased in 2026, the CRA capital cost ceiling is $38,000 plus applicable federal and provincial sales taxes (or $61,000 before tax for eligible Class 54 zero-emission passenger vehicles), while deductible leasing costs are capped at $1,100 per month before tax and deductible car loan interest is capped at $350 per month. True work vans and pickup trucks used more than 50% (or 90% depending on configuration) to haul tools, equipment, and materials in a trade generally qualify as “motor vehicles” rather than “passenger vehicles” and are not subject to the Class 10.1 passenger-car ceiling.

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This article is general information, not tax advice. Confirm current motor vehicle rules on Canada.ca or with a Canadian CPA.