CRA reduces automobile log requirements
Good news for those of us that are (or are supposed to be) keeping a log of the business use of our personal car. CRA has announced today that they are lowering the logging requirements:
Ottawa, Ontario, June 28, 2010… The Honourable Keith Ashfield, Minister of National Revenue, Minister of the Atlantic Canada opportunities Agency and Minister for the Atlantic Gateway, is pleased to announce the introduction of a new simplified logbook for motor vehicle expense provisions as part of the government’s overall strategy to assist small and medium sized businesses and Canada Revenue Agency’s (CRA’s) aim to ease the tax compliance burden of small business owners.
Previously, you were required to keep a log of absolutely every trip taken to establish the business purpose. Needless to say this is a lot of work, so a lot a people just didn’t do it. CRA has recognized this and wants to reduce the cost (time) the taxpayer must spend on their record keeping.
The new rule redcues the requirement to log trips by 75%:
- A log book must first be kept for one year to establish the “baseline” business use %
- After the baseline is established, the taxpayer is only required to keep a log for 3 months of a year. The business use % is then extrapolated from that. Three months a year are still requirement in order to make sure that the baseline is still accurate.
- The extrapolated 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
This is great news for taxpayers. It’s good to see CRA making changes in order to improve the system. I wouldn’t normally say this…but, thanks CRA!
