Leave a commentIn the 2008 federal budget, the government indicated its willingness to assist business by reducing the paperwork burden. In the past you were required to keep a log of every trip taken to establish the business purpose. CRA has recognized that many tax payers cannot and will not maintain this log and wants to reduce the cost (time) the taxpayer must spend on their record keeping.
The new rule substantially reduces the requirement to log trips:
- A log book must first be kept for one year to establish the “baseline” business use percentage
- After the baseline year is established and documented, the taxpayer is only required to keep a log for 3 months of a year
- The business use percentage is then extrapolated from the 3 month log
- Three months a year are still requirement in order to make sure that the baseline is still accurate.
- The 3 month log figure must be within 10% of the “baseline” year. The 3 month sample period must also be representative of the usual use of the vehicle
For further information go to the CRA website to get more details http://www.cra-arc.gc.ca/whtsnw/lgbk-eng.html