How Business Drives Differ from Personal Drives
Whether you are a small business owner or someone who uses the company vehicle for business purposes and drives a lot to run personal errands, chances are you might be seeking a way to monitor your mileage. Before you can start doing tracking your mileage, the first thing you need to do is understand the difference between a business drive and a personal drive. Read on to develop a good understanding between the two.
According to the tax laws in Canada, your business-related drives qualify for a tax deduction if, in spite of using your private vehicle for work, your employer does not provide you with a transport allowance. This rule is also applicable to those individuals who are self-employed.
Furthermore, going by the CRA guidelines, above rule is not applicable in case your employer pays for travel expenses, then vehicle expenses are not considered tax deductible.
If an individual uses his/her employer’s vehicle for personal use and still receives a vehicle allowance from their employer, they are required to include a part of it under vehicle allowance while filing their tax return as the CRA treats it as a taxable benefit.
According to the CRA, the following trips constitute personal drives:
- Personal trips linked to vacations
- Trips associated with personal activities
- Commuting between home and workplace unless one travels to another location to perform their work
- Trips associated with errands or personal activities
The Regular Place of Employment
The CRA takes the following factors into consideration while deciding whether one’s workplace is a regular place of employment:
- An office wherein one must report on a daily basis
- Various store locations wherein one must visit at certain times in a month
- The premises of a client wherein an individual is required to visit at least on a regular basis for at least six months
- A client’s premises in which one is required to report their bi-weekly meetings
In case one is required to visit several places of employment, the first drive at the start of a day is treated as a personal trip. The same holds true when one returns home from their workplace.
The Best Way To Monitor Your Business Mileage
One of the best ways to track business mileage when you are on the go is to download an app in the niche. You can download it on your smartphone. Run the app after its installation and let it run in the background while you drive.
We provide accounting services in North York, Ontario. Get in touch with us for any help regarding paying your taxes. Contact us now!