When a business owner is using a vehicle for both personal and business use, the same philosophy applies as with the home business expenses. Where square footage was used in the home calculation, kilometres driven are used for the vehicle calculation.
Over the course of the year, the business owner maintains an envelope in the car, where all car expenses are stored. These include gas, repairs, insurance (and interest payments if the car is financed).
This is directly tied to the kilometres driven for business purposes over the course of the year. To begin to calculate business kilometres driven, the total kilometres driven are required. This is calculated by subtracting the odometer reading at the beginning of the year from the year-end odometer reading.
If the business is a GST registrant, this is the percentage of GST on vehicle bills that can be claimed for credit as well.
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