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How to Keep a CRA-Compliant Mileage Log in 2026

The CRA requires proper mileage records to support vehicle expense deductions. A compliant log does not have to be complicated - but it does have to be consistent.

Published by Scott Sutherland5 min read

Image source: Unsplash

Why a mileage log is non-negotiable if you claim vehicle expenses

The vehicle expense deduction is one of the most commonly audited items on a Canadian tax return, both personal and corporate. The CRA's position is straightforward: you can deduct the portion of vehicle operating costs that relates to business use, and you must be able to prove that business-use percentage with documentation. The required documentation is a mileage log - a contemporaneous record of every business trip made with the vehicle. Without it, the CRA will typically deny the vehicle deduction in full or estimate the business use at a significantly lower rate than claimed.

A mileage log must capture specific information for each business trip: the date, the starting point and destination, the purpose of the trip and the client or business activity it relates to, and the odometer reading at the start and end of the trip. You also need to record the total odometer reading at the start and end of the year, which allows you to calculate total kilometres driven and the percentage attributable to business. Some bookkeepers also recommend noting whether the client was billed for the mileage, as this helps demonstrate the business purpose independently.

Many business owners make the mistake of trying to reconstruct their mileage log at tax time using their calendar, email history, or memory. The CRA does not accept reconstructed logs, and auditors are trained to spot them. A log that shows suspiciously round numbers, consistently even distances, or business trips on known statutory holidays will raise questions. The only log the CRA fully accepts is one maintained in real time, throughout the year, at the time of each trip. Modern mileage tracking apps make this significantly easier than it used to be.

  • A mileage log must record the date, starting point, destination, business purpose, and odometer readings for each trip.
  • Record your total odometer reading at the start and end of the year to calculate the annual business-use percentage.
  • Reconstructed logs created at tax time are not accepted by the CRA and are easy for auditors to identify.
  • Keep the log current throughout the year - real-time records are the only ones that hold up under review.

The simplified logbook method and how it works

Maintaining a full mileage log every year can feel burdensome for business owners who drive frequently. The CRA offers a simplified logbook method, sometimes called the sample logbook method, as an alternative for subsequent years once a full base year log has been established. Under this method, you keep a complete, full-year logbook in the base year. In subsequent years, you keep a logbook for only a three-month sample period and use it to extrapolate your business-use percentage for the full year, provided the usage is within ten percent of the base year percentage.

To use the simplified method, the three-month sample period must be representative of your typical driving patterns. It cannot be the slowest three months of your year if business driving varies significantly by season. The calculated business-use percentage from the sample period is then compared to the base year percentage. If it is within ten percentage points, you may use it. If your driving patterns have changed significantly, you may need to return to a full logbook for the year. The CRA guidance on this is detailed in their vehicle expense documentation, and it is worth reviewing carefully before relying on the simplified method.

A practical approach many small business owners use is to keep the full log for the first year in business, then use the three-month method in subsequent years when driving patterns are stable. If you add a new major client, change your territory, or significantly shift your business model, go back to a full log for one year to reset the baseline. The three-month method is a legitimate and CRA-approved simplification, not a workaround. Using it correctly means less administrative burden without sacrificing the legal validity of your vehicle deduction. One area where the simplified method can create complications is if the CRA audits a year that predates your base year log. In that case, the auditor will want to see the full-year base log. Ensuring you keep the base year logbook on file indefinitely, not just for six years, is therefore a prudent precaution.

  • The simplified logbook method allows a three-month sample log in subsequent years after one full base year log is completed.
  • The sample period must be representative of your typical driving patterns - not your slowest months.
  • If your business-use percentage from the sample is within ten percent of the base year, you may use it for the full year.
  • Return to a full logbook if your driving patterns change significantly, such as adding a major new client or territory.

Apps, software, and the best way to stay consistent

The biggest barrier to maintaining a mileage log is consistency. Most people intend to keep one and stop doing it after three weeks. The most effective solution is to use a mileage tracking app that uses your phone's GPS to automatically detect trips. Apps like MileIQ, Driversnote, and Everlance automatically log every trip you take and allow you to swipe to classify each one as business or personal. At the end of the month, they produce a summary report that can be exported to a spreadsheet or directly to your accounting software. For small business owners who drive regularly for client visits, deliveries, or site inspections, automated tracking is almost always worth the subscription cost.

If you prefer a manual approach, a simple logbook kept in the glove compartment of the vehicle is still perfectly acceptable. The key is to fill it in immediately after each trip, before the details become vague. A small notebook with columns for date, starting point, destination, purpose, and odometer readings is all you need. Some people use a spreadsheet on their phone instead. The format does not matter to the CRA; the completeness and contemporaneousness of the record does. Whatever format you choose, the habit of recording trips at the time they happen is what makes the log valid.

Integrate your mileage tracking with your bookkeeping so that business kilometres are linked to the corresponding business activities. If you visited a client and recorded it in your CRM, the mileage log entry for that same day and destination is corroborating evidence. If you attended a conference and kept the registration receipt, the mileage for the drive to and from the event is supported by that documentation. Building a web of connected records makes your vehicle expense deduction much harder to successfully challenge in an audit. It also makes year-end bookkeeping faster, since everything is organized and documented as you go rather than scrambled together at the last minute. At year end, your mileage log should give you the total business kilometres driven and the total kilometres driven overall, allowing you to calculate the business-use percentage. That percentage is applied to all vehicle operating costs: fuel, insurance, repairs, licensing, and the CCA or lease payments. Reviewing this percentage annually is also a good habit, since a significant change in your business-use percentage could affect whether you should consider a dedicated business vehicle or adjust your compensation structure.

  • GPS-based apps like MileIQ, Driversnote, or Everlance automate trip logging and dramatically improve consistency.
  • A manual logbook in the glove compartment still works - fill it in immediately after each trip while details are fresh.
  • Connect your mileage records to corresponding business activities like client visits and conference receipts for stronger documentation.
  • Consistent year-round tracking is faster at tax time than trying to reconstruct the year from calendar entries and memory.

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