Purtzki, Johansen + Associates


You need proof of total km driven when you claim auto expenses

When CRA audits your auto expenses, you not only need proof for the expenses incurred but you also have to substantiate the total kilometres driven. This fact was highlighted in a Tax Court of Canada case.

The taxpayer, Ms. Wallens, used her automobile to service customers for her advertising business. On her tax return, she claimed 90% of her car expenses. She based the 90% business usage on the 1015 km driven out of the total 1353 km for the whole year. The Tax Court initially objected to the fact she did not have receipts but it eventually accepted the credit card statements for the auto expenses. Based on her log, she claimed 90% business use for her car. However, according to the odometer readings on a number of repair shop invoices she submitted, it showed that she actually drove 10,000 km in the year, instead of 1353 km. As a result the Minister only allowed 10% of the automobile expenses.

This court case is a reminder is that you not only have to provide evidence for the automobile expenses incurred but also provide evidence, such as the repair invoices, for the total kilometres driven.

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