If you drive for your business — even occasionally — mileage is one of the easiest tax deductions available to Canadian business owners.

But here’s the catch:

Most people do it wrong.
Some under-claim it.
Some over-claim it (accidentally).
Some skip it entirely because it feels complicated.
And many think “my accountant will handle it,” not realizing the accountant can only use the numbers you provide.

Mileage isn’t a guessing game.
It’s a goldmine when done properly — and a nightmare if CRA audits you and you don’t have a log.

Here’s how to finally do it right.

1. Canada’s Mileage Rule Is Simple — The Execution Isn’t

In Canada, you can deduct vehicle expenses based on business-use percentage, which comes from one number:

Business km ÷ Total km × 100

If you drive 20,000 km in a year
and 8,000 km are business,
your business-use is 40%.

That percentage gets applied to:

• Fuel
• Repairs
• Insurance
• Depreciation (CCA)
• Loan interest
• Registration
• Oil changes
• Car washes
• Parking at client sites

This is one of the biggest deductions owners miss.

2. Where Most Business Owners Mess Up

Here are the common mistakes that cause problems at tax time:

1. Not tracking mileage at all

“I drove a lot” won’t fly with CRA.
They want dates, addresses, and purpose.

2. Only tracking business km, not total km

Without total km, there is no percentage.
This is a top trigger for audits.

3. Using estimates

CRA doesn’t allow “about 30%.”
It must be traceable.

4. Mixing personal and business fuel receipts

This is fine — but without mileage, the fuel expense is useless to your accountant.

5. No starting/ending odometer readings

This is the foundation of the entire deduction.

Mileage is simple —
but CRA wants the math to match the story.

3. The CRA-Approved Method (That Hardly Anyone Actually Uses)

CRA wants you to maintain:

• Your odometer at Jan 1
• Your odometer at Dec 31
• Every business trip with:
  • Date
  • Start location
  • End location
  • Purpose
  • KM driven

This doesn’t mean you track every single personal errand.
You only track business trips — and keep yearly odometer readings.

A simple system beats a perfect system every time.

4. The Easiest Way to Track Mileage (One Minute Per Day)

Here’s a simple method that keeps you compliant without stress:

Daily:

• Record business trips only
• Use your phone’s map history or quick notes
• 10 seconds per trip

Monthly:

• Snap a photo of your odometer
• Send it to your bookkeeper (Castle loves this)

Yearly:

• Write down your Jan 1 and Dec 31 odometer
• That’s your total km

Clean, consistent, audit-proof.

5. Why Mileage Matters More Than You Realize

For many Canadian owners, mileage is worth thousands in tax savings.

Example (realistic):

• Total driving: 22,000 km
• Business driving: 9,000 km → 41%
• Annual vehicle expenses: $9,800
• Deductible amount: $4,018

If your tax rate is ~30%, that’s roughly:

$1,200+ saved — just from tracking your driving.

Over five years, that’s six thousand dollars owners either save or lose depending on one habit.

Mileage isn’t small.
It’s a quiet superpower.

6. How Castle Bookkeeping Makes Mileage Stress-Free

This is one area where our clients often breathe a huge sigh of relief.

We help you:

• Set up a simple mileage-tracking system
• Organize receipts so CRA sees clean support
• Track business vs personal usage correctly
• Make sure deductions match CRA rules
• Ensure your CPA has everything they need for year-end
• Keep the logs audit-proof

You don’t need to be perfect — you just need a consistent system.
We build that with you.

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