Personal Tax Update – Travel Expenses
Most owner and operators of their own business are not aware of some of the expenses that they should be tracking. One common expense that most of our owner/operator clients forget to keep track of is their use of their personal motor vehicle for business purposes.
When you have incorporated your business, and you use your personal vehicle that’s not under the business’s name, you should be reimbursed for using your vehicle for business. Similar to employees that complete their expense reimbursement reports for their company that they work for, an active shareholder can also be reimbursed for their expenses incurred on behalf of their corporation.
It is reasonable to be reimbursed $0.55 per kilometer that you drive for business purposes for the first 5,000 kilometers. An owner/operator shareholder can be reimbursed for the business related travelling for his/her business. Keeping track of the mileage of the vehicle through the use of a log book is important as support for the mileage. Key items such as date, location and kilometers driven (to and from your office to the client) should be tracked in the log book. Having a formal expense reimbursement agreement would be helpful too. More documentation available for the CRA is always better in the event of an audit.
For more information on this topic, please feel free to contact MP Group.