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Transportation company accounting lives and dies on the vehicle records. The CRA says the best proof of business use is an accurate logbook kept for the whole year, and it wants a receipt behind every vehicle cost you deduct. Get those two right and most of the rest, fuel, repairs, payroll and sales tax, falls into place.
What goes in a vehicle logbook?
For each business trip the CRA wants the date, the destination, the purpose and the kilometres driven. You also record the odometer reading at the start and end of the fiscal period, and again on the day you buy, sell or trade a vehicle. A fleet needs one logbook per vehicle, not one shared sheet. The CRA’s page on motor vehicle records lists these fields and explains the sample-period shortcut covered below.
| Item | Requirement |
|---|---|
| Each trip | Date, destination, purpose, kilometres |
| Each vehicle | Odometer at start and end of the period |
| Vehicle changes | Dates and odometer when bought, sold or traded |
| Expenses | Receipts, and the costs must be reasonable |
| Retention | Six years from the end of the tax year the record relates to |
Dispatch software or an electronic logging device can produce most of this for you. The CRA’s pages don’t endorse any product, so the test is whether the output shows those fields and can be read when you’re asked for it.
How do you work out the business share of a vehicle?
Divide business kilometres by total kilometres. Say a delivery van ran 38,000 km in the year, and the logbook shows 27,300 of them were for the business. That’s 71.8%, which you can check with the percentage calculator. You’d apply that share to the shared costs of the vehicle.
The CRA lets you switch to a three-month sample log after a full twelve-month base year, as long as business use stays within 10% of the base year. If a sample comes out more than 10% away from the base, it isn’t reliable for the whole year. For a busy carrier with steady routes, that can save real time.
The formula is simple. Take the sample period’s business use, divide it by the same three months in the base year, and multiply by the base year’s annual figure. The CRA’s own example does (51% divided by 46%) times 49% and lands on about 54%, which it accepts for the year if nothing contradicts it. Treat it as a shortcut for steady routes, not for a year when your contracts changed.
What about fuel, repairs and sales tax?
Keep every invoice. If a repair bill in Ontario is $1,130, the HST reverse calculator splits it into $1,000 and $130 of HST. The $130 may come back as an input tax credit if you’re registered and hold the supporting paperwork. The CRA lists those conditions and gives most registrants four years from the end of the reporting period to claim.
Registration isn’t automatic. A small supplier, at $30,000 or less of taxable revenue in a single calendar quarter and in the last four consecutive quarters, doesn’t have to register. Add up your own revenue by quarter to see where you stand. How the rules apply to specific services such as ride-sharing or cross-border haulage is a separate question, so read the CRA’s page for yours.
How should a transportation company split costs in the ledger?
Keep operating costs, such as fuel, tires and repairs, apart from office and administration costs. The split shows what each vehicle earns and costs, and that’s what tells you which truck to replace. Record freight revenue and any leasing income in separate accounts, too, since they behave differently at tax time.
Capital cost allowance rates and vehicle classes aren’t covered here, and a wrong class is an expensive mistake. Take them from the CRA’s capital cost allowance pages.
Meals on the road follow a limit of 50% of what you spent or a reasonable amount, whichever is less. The CRA notes that special rules can affect a claim for meals while travelling, so read its meals page before you assume the general limit applies to a driver.
What does payroll add?
Drivers usually mean staff, and staff mean source deductions. The payroll remittance calculator estimates what an employer sends the CRA each pay period. Owner-operators who bill the company are a different case, and the self-employed tax calculator is closer to what they face. Both groups may pay tax in instalments, which the tax instalments calculator estimates.
Fuel is the line most owner-operators watch. A rough check, as a ballpark and not a rule: divide the litres on your fuel card statement into the kilometres in your logbook each month. If one truck suddenly drinks far more than the others, the logbook may be missing trips, or something is wrong with the truck.
Which mistakes cost the most?
Late logbooks.
Rebuilding the log after the fact. A guess at the year’s kilometres at filing time is weak evidence next to a log kept trip by trip, and the CRA says an accurate log is the best proof. Mixing personal trips into business totals comes second. Deleting old records early comes third, and that needs the CRA’s written permission on form T137.
Run the bank reconciliation monthly and the fuel card statement against the logbook. A fuel total that doesn’t match the kilometres is worth a question at once.
Our sources
Logbook, sample period, retention, meals, ITC and small supplier points come from Canada Revenue Agency pages checked in September 2026. The HST example uses Ontario’s 13% rate from our calculators. No level of government runs or endorses this site.
Frequently asked questions
What does the CRA want in a vehicle logbook?
The date, destination, purpose and kilometres of each business trip, plus the odometer reading at the start and end of the fiscal period.
Can I use a sample logbook?
After a full twelve-month base year you may use a three-month sample, if business use stays within 10% of the base year.
How do I calculate business use of a vehicle?
Divide business kilometres by total kilometres. 27,300 of 38,000 km is 71.8%.
Can I claim the HST on fuel and repairs?
If you are a registrant, the tax may come back as an input tax credit when the purchase was for commercial activities and you hold the supporting documents.
How long do I keep vehicle records?
Six years from the end of the tax year they relate to. A base year logbook is kept six years from its last use.
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