KM Logbook Canada: CRA Requirements for Self-Employed

What Is a KM Logbook and Why Does CRA Require It?

If you are new to self-employment taxes in Canada, start with our complete guide to self-employed tax deductions and T2125 expense tracking.

If you are self-employed in Canada and you use your vehicle for business, you can deduct a portion of your vehicle costs on your T2125 (Statement of Business Activities). But CRA does not take your word for it. You need a logbook.

A KM logbook is a record of every business trip you take in your vehicle. CRA uses it to verify your business use percentage, which determines how much of your vehicle costs you can deduct.

Without a logbook, CRA can deny your entire vehicle deduction. This is one of the most common reasons sole proprietors lose deductions in an audit.

What CRA Requires in a KM Logbook

CRA requires the following information for every business trip:

• Date of the trip
• Destination - where you drove from and where you drove to
• Business purpose - why the trip was business related
• Kilometres driven for that trip
• Odometer readings at the start and end of the year (and ideally each trip)

The logbook must cover the full year - January 1 to December 31. CRA also recommends recording your odometer at the start of each trip and the end, though the minimum requirement is the total kilometres for the trip.

What Counts as a Business Trip?

Not every drive qualifies as a business trip. CRA is specific about what counts.

Business trips that qualify:

• Driving to a client meeting
• Driving to pick up supplies or materials
• Driving to a job site
• Driving to a bank for business banking
• Driving to a government office for business purposes

Trips that do not qualify:

• Commuting from home to your regular office or fixed place of business
• Personal errands
• Driving to a gym or restaurant for non-business purposes
• Vacations or personal travel

One important note: if your home is your principal place of business, then driving from home to a client location counts as a business trip because you are leaving your place of business.

How to Calculate Your Vehicle Deduction Using the T2125 Method

Self-employed Canadians filing a T2125 use the actual expense method. This is different from the rate used by employees.

The formula is:

Business use % = Business kilometres / Total kilometres (from odometer)

Claimable amount = Business use % x Total vehicle costs

Total vehicle costs include:

• Insurance premiums
• Fuel and oil
• Maintenance and repairs
• Loan interest (subject to CRA limits)
• Lease payments (subject to CRA limits)
• Registration and licensing fees
• Car washes

Example:

You drove 15,000 km total in 2026. Of those, 4,500 km were for business. Your business use percentage is 30%. Your total vehicle costs were $8,000. Your claimable vehicle deduction is $2,400.

The 73 Cents Per Kilometre Rate Does Not Apply to You

This is a common and expensive mistake. The 73 cents per kilometre rate (the CRA prescribed rate for 2026) is the rate employers use to reimburse employees for business travel. It applies to employees only.

If you are self-employed and filing a T2125, you use the actual expense method described above. Using the 73 cents per kilometre rate on your T2125 is incorrect and will not hold up in an audit.

What Is a Contemporaneous Logbook?

CRA specifically requires that your logbook be contemporaneous. This means you record your trips as they happen, not at the end of the year.

Reconstructing a logbook in April from memory is not acceptable to CRA. If you are audited and your logbook looks like it was created all at once rather than trip by trip, CRA can reject it.

The safest approach is to record each trip immediately after it happens or at the end of each day.

The Representative Year Method

If you have been keeping a logbook for several years and your business use percentage is consistent, CRA allows you to use a representative year approach. You keep a full logbook for one base year, then keep a three-month sample logbook in subsequent years to confirm your business use has not changed significantly.

This can reduce the burden of logbook keeping once you have established a consistent pattern. However, you still need to track your total annual odometer reading every year.

What Happens If CRA Audits Your Vehicle Deduction?

If CRA audits your vehicle deduction and you cannot produce a logbook, they will typically disallow the entire vehicle expense claim. This means you would owe back taxes plus interest on the disallowed amount.

If you have a logbook but it is incomplete, CRA may allow a partial deduction based on what you can substantiate. They may also compare your claimed business kilometres to your total odometer reading to check whether your percentage is plausible.

The safest position is a complete, contemporaneous logbook for the full year.

How to Keep a KM Logbook

There are several ways to keep a logbook:

Option 1 - Paper logbook

A simple notebook works. Record date, from, to, purpose, and kilometres for each trip. Keep it in your vehicle so you never forget.

Option 2 - Spreadsheet

A Google Sheet or Excel file with columns for date, from, to, purpose, and kilometres. Easy to total at year end.

Option 3 - Bookkeeping software

Apps like SnapBooks include a built-in KM logbook that records each trip with all CRA-required fields and automatically calculates your business use percentage and T2125 vehicle deduction using your actual vehicle costs.

Frequently Asked Questions

Does CRA require a logbook for vehicle deductions?

Yes. CRA requires a contemporaneous logbook for anyone claiming vehicle expenses on a T2125. Without a logbook, CRA can deny your entire vehicle deduction in an audit.

What is the difference between the 73 cents per kilometre rate and the T2125 actual expense method?

The 73 cents per kilometre rate applies to employees whose employers reimburse them for business travel. Self-employed Canadians filing a T2125 must use the actual expense method: business use percentage multiplied by total vehicle costs including insurance, fuel, maintenance, loan interest, and registration.

Can I reconstruct my logbook at tax time?

No. CRA requires a contemporaneous logbook, meaning you record trips as they happen. A logbook reconstructed at year end from memory or estimates is not acceptable to CRA and will not hold up in an audit.

What if I use my vehicle for both business and personal trips?

You track both. Your business use percentage is calculated by dividing your business kilometres by your total kilometres driven for the year (from your odometer). The percentage is then applied to your total vehicle costs to calculate your deductible amount.

Does driving from home to a client count as a business trip?

If your home is your principal place of business, then yes, driving from home to a client location counts as a business trip. If you have a separate office outside your home, driving from home to that office is considered commuting and does not qualify.

How long do I need to keep my logbook?

CRA requires you to keep all business records, including your KM logbook, for six years from the end of the tax year they relate to.

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