Personal Drives vs Business Drives: What's the Difference?

If you drive a lot for work, you may be wondering what's the best way to track your mileage. If you are a small business owner or if you use a company vehicle to run personal errands, you should also know the difference between a personal drive and a business drive. Keep reading to find out what you can claim.  

Using your own vehicle vs. your employer's vehicle

If you use your privately-owned vehicle for work and your employer does not reimburse you for your expenses or provide you with a vehicle allowance, then your business-related drives will be tax deductible. The same is true if you are self-employed.  If your employer provides you with a vehicle and reimburses you for your travel expenses, your vehicle expenses are not tax deductible. In fact, if you use your employer's vehicle for personal use and you receive a vehicle allowance to cover the cost of gas and maintenance, that vehicle allowance will be considered a taxable benefit. This company perk means you will need to include a portion of your vehicle allowance on your income tax return.

What is viewed as a personal drive?

Personal drives may include the following:

 
• Personal vacations and trips
 
• Trips to run errands or carry out personal activities
 
• Commuting between home and a regular place of employment, unless you are travelling to a point of call*
 
• Commuting between home and a regular place of employment while on call.

*A point of call is any location you report to perform work-related duties other than your employer's regular place of employment.

What constitutes a regular place of employment?

According to the CRA, a regular place of employment is any location that you regularly report to for work or to perform work-related duties. "Regular" means you go there somewhat frequently or repeatedly. However, this location doesn't necessarily have to be your employer's main base.  More specifically, a regular place of employment can be any of the following:

 
• An office you must report to every day
 
• Various store locations that you must visit on a monthly basis
 
• A client's premises, if you are required to visit there daily for at least six months
 
• A client's premises, if you are required to report there for bi-weekly meetings.

If you have several places of employment, the first drive you make at the beginning of the day between your home and the first employment location is considered a personal trip. The same is true of your drive home at the end of the day. Business drives constitute any travelling you do between work locations.

Exceptions

If your employer provides you with transportation from a pick-up point to your place of work because private vehicles are either not allowed or inconvenient at your work location, your vehicle allowance will not be considered a taxable benefit. The same rule applies if you are required to work at a particular work site or remote location. For more information regarding whether your situation applies as an exception, consult your tax preparer or CPA.

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What's the best way to accurately track business mileage?

A great way to track mileage is to download a mileage tracking app such as MileIQ, Mileage Tracker by Driversnote, or the Everlance Mileage Log Tracker. After installing the app onto your smartphone, the program runs in the background and senses when you are driving.  The app then automatically enters those drives into a logbook. With the MileIQ app, swipe left to classify travel as personal, and swipe right to categorize them as business-related. You can even add details such as tolls, parking fees, and other notes.  All in all, classifying business trips and personal runs shouldn't be that complicated as long as you remember that your commute is not considered a business-related drive. The only time your commute is considered a business-related trip is when you are asked to report to a special point of call.