From time-to-time Canada Revenue Agency may ask for supporting documentation regarding motor vehicle expenses.
To be prepared, here are some, but not limited to all items you would need to support your deducted vehicle expenses:
•Detailed list of transactions related to the expenses. This would be your account transactions for all vehicle expense accounts recorded in your bookkeeping. •Copies of invoices and receipts for the transactions recorded in your bookkeeping •A description of all vehicles owned or leased, and those supporting purchase or lease documents •A description of whether the company, shareholder or employee owns or leases the vehicle
If a vehicle was used for personal use, you could be asked for the following:
•The percentages of business use and personal use •A travel log used to track usage •An explanation of how you accounted for the usage. (For example: expenses reduction, employee reimbursement, employee benefit, standby charge).
It is best practice to keep all your receipts, and if you or your employees are using a company vehicle personally, please keep a vehicle log.
