Published by Beaver Ledger · Edited
General record-keeping for self-employed people in Canada. Yearly vehicle limits and your own tax claim aren't calculated.
The question
Can I deduct the full car payment if I use the vehicle for work?
No. Part of each car payment repays the loan, which isn't an expense. What you can claim is the business share of your vehicle costs, such as fuel, insurance, repairs, some interest and capital cost allowance, and each has its own rules and limits.
Start with a kilometre log
If you drive for both work and personal use, record your total kilometres and your business kilometres, and keep your receipts. The CRA's rules decide which trips count as business; calling all your driving "work" isn't enough.
Example: working out the business share
Say your log shows 8,000 business kilometres out of 20,000 in total. Your business share is 40%. If a $2,000 expense could be fully claimed and no other limit applied, the business part would be $800.
That doesn't mean you can deduct 40% of every car payment. Loan principal, capital cost allowance, parking and interest are each treated differently, and some vehicles have yearly limits.
What the car loan calculator covers
It works out the financing: the price, sales tax on a dealer purchase, your trade-in, down payment, fees and interest. It doesn't work out your business claim on form T2125, GST/HST input tax credits, deductible interest or capital cost allowance.
A monthly payment that feels affordable can still be a long commitment. Add up the total cost of the loan, insurance and upkeep, and think about how steady your gig income is, before deciding.
Records to keep
Keep the purchase and loan agreements apart from your expense log, so you can tell loan repayment, interest and running costs apart.
- Odometer readings and a log of business trips.
- Receipts, and your lender's breakdown of interest paid.
- The vehicle limits for the year you're filing.
- Advice for your situation if you're both an employee and self-employed.
Sources checked for this editorial revision on October 3, 2026. Educational content from Beaver Ledger; no professional review is claimed. Methods and limitations · Editorial practices and corrections.