Every self-employed Canadian who drives for work ends up on the same page of their tax return: Chart A — Motor Vehicle Expenses on Form T2125. This is the section where sole proprietors, freelancers, and independent contractors convert a year of fuel receipts, insurance premiums, and repair bills into a single deductible number on Line 9281.
The math is straightforward once you understand the structure. You list every vehicle cost for the year, multiply by your business-use percentage, and the result reduces your net business income. But the CRA is particular about how you arrive at that percentage and which expenses qualify, so getting the details right matters.
This guide walks through Chart A line by line, shows you how Charts B and C feed into it, and includes a filled-in example you can follow when completing your own return.
Who Reports Vehicle Expenses on T2125?
Form T2125 (Statement of Business or Professional Activities) is filed by anyone reporting self-employment income on their T1 personal return. You complete Chart A if you used a motor vehicle or passenger vehicle to earn that income and want to deduct the related costs.
You qualify if you are a:
- Sole proprietor — freelancers, consultants, tradespeople, real estate agents
- Independent contractor — not on any employer’s payroll
- Partner in a business partnership — you may also need Part 5 for personal vehicle claims
- Commission earner filing as self-employed
Unlike employees, who need an employer-signed T2200 before claiming anything, self-employed filers report vehicle expenses directly on T2125 without employer approval.
How Chart A Works: The Three-Step Formula
Chart A appears on page 5 of Form T2125. It follows a simple structure that the CRA uses to calculate the deductible portion of your vehicle costs.
Step 1 — Enter your kilometres. Lines 1 and 2 ask for your total kilometres driven during the tax year and your business kilometres driven. These numbers come directly from your mileage logbook. The CRA divides business km by total km to produce your business-use percentage on Line 13.
Step 2 — List every eligible expense. Lines 3 through 12 capture each category of vehicle cost for the full year. You enter the total annual amount for each expense, before applying any business-use percentage. If you financed or leased your vehicle, amounts from Chart B (interest) or Chart C (leasing) carry over into Chart A.
Step 3 — Apply the business-use percentage. The total on Line 12 is multiplied by the percentage on Line 13. The result is your deductible motor vehicle expense, which flows to Line 9281 on T2125 and reduces your net business income.
Parking fees related to business activities and supplementary business insurance can be deducted in full — they are not subject to the business-use percentage.
Every Eligible Expense on Chart A
Here is every cost category you can include when completing Chart A on your T2125:
Fuel and oil — your total annual spending on gasoline, diesel, or charging costs for an EV. Keep all receipts or credit card statements as backup.
Maintenance and repairs — oil changes, new tires, brake service, transmission work, and any other mechanical repair. Labour and parts are both deductible.
Insurance premiums — your full annual auto insurance premium. If you pay monthly, total up the 12 payments.
Licence and registration — provincial vehicle registration fees and licence plate renewal costs.
Loan interest (Chart B) — if you financed the vehicle purchase, interest is deductible up to $350 per month ($4,200 per year) for 2026. You complete Chart B on page 8 of T2125 to calculate the allowable amount, then carry it back to Chart A.
Leasing costs (Chart C) — if you lease your vehicle, monthly payments are deductible up to $1,100 per month (before GST/HST) for 2026. Chart C on page 8 walks you through the CRA’s lease formula when your payments exceed the cap. The result carries back to Chart A.
Capital cost allowance (CCA) — depreciation on an owned vehicle, calculated separately in Area A on page 5 of T2125. CCA is claimed on Line 9936 rather than Line 9281, but it also depends on your business-use percentage. Common CCA classes include Class 10.1 (passenger vehicles, 30% rate, $39,000 cost cap), Class 10 (trucks, 30%, no cap), and Class 54 (zero-emission vehicles, 55% first year, $61,000 cap). For a deeper explanation of CCA, see capital cost allowance vehicle Canada.
Other expenses — car washes for a client-facing vehicle, roadside assistance, and similar minor costs.
Filled-In Chart A Example
Here is a realistic example for a self-employed consultant who leases a vehicle and drives it for both business and personal purposes.
Facts: 20,000 total km driven in the tax year. 14,000 km for business. Leased vehicle at $950/month (under the $1,100 cap).
| Chart A Line | Expense | Annual Amount |
|---|---|---|
| Line 1 | Total km driven | 20,000 |
| Line 2 | Business km driven | 14,000 |
| Line 3 | Fuel and oil | $5,200 |
| Line 4 | Maintenance and repairs | $1,600 |
| Line 5 | Insurance | $2,400 |
| Line 6 | Licence and registration | $160 |
| Line 7 | Lease costs (from Chart C) | $11,400 |
| Line 12 | Total expenses | $20,760 |
| Line 13 | Business-use % (14,000 / 20,000) | 70% |
| Line 14 | Deductible amount | $14,532 |
This $14,532 flows to Line 9281 on your T2125 and directly reduces your net self-employment income. At a 30% marginal tax rate, that is roughly $4,360 back in your pocket.
Chart B and Chart C: Interest and Lease Limits
If you finance or lease your vehicle, you cannot simply enter your full annual payments on Chart A. The CRA imposes caps, and Charts B and C ensure you calculate the allowable amounts correctly.
Chart B — Interest on a vehicle loan. The 2026 limit is $350 per month. If you paid $400/month in interest, your deductible amount is capped at $350 x 12 = $4,200, not $4,800. Enter the result on the appropriate line in Chart A.
Chart C — Leasing costs. The 2026 limit is $1,100 per month before tax. If your lease payment is below $1,100, you simply use your actual cost. If it exceeds $1,100, Chart C applies a formula that also factors in the manufacturer’s suggested list price (MSRP) and the prescribed limit. The GST/HST on top of the lease payment is not included in the $1,100 cap — that portion is claimed separately as an input tax credit on your GST/HST return. For more on ITCs, see GST HST input tax credit vehicle.
Common Mistakes That Trigger CRA Reviews
Inflated business-use percentage. This is the single most audited number on T2125. If you claim 90% business use but cannot produce a logbook showing trip-by-trip detail, the CRA will reduce your claim or deny it entirely. The agency specifically looks for round, high percentages with no supporting records.
Entering the wrong CCA starting balance. If you owned the vehicle in a prior year, your undepreciated capital cost (UCC) must carry forward from your previous T2125. Using the original purchase price every year is incorrect and will result in overclaimed depreciation.
Ignoring the lease formula. The $1,100/month cap is not a simple cutoff. When your lease payment or MSRP exceeds certain thresholds, Chart C applies a more detailed formula. Skipping Chart C and just writing $1,100 x 12 may produce the wrong number.
Including GST/HST in lease costs on Chart A. The $1,100 cap applies to the pre-tax payment. Sales tax on the lease is recovered through your GST/HST return as an input tax credit, not through Chart A.
No logbook at all. Without a logbook, you cannot fill in Lines 1 and 2 of Chart A, which means you have no business-use percentage, and the CRA can deny your entire vehicle expense claim. For full details on what the CRA requires, see CRA mileage log requirements.
Your Mileage Log Powers Every Line of Chart A
Every deductible dollar on Chart A traces back to two numbers: total kilometres and business kilometres. Those numbers come from your mileage logbook — and the CRA will ask for it if they review your return.
Tripbook records every business trip with GPS-verified start and end points, calculates your annual business-use percentage automatically, and exports a year-end report that maps directly to Lines 1 and 2 of Chart A. Instead of reconstructing a logbook from memory at tax time, you open Tripbook’s export and fill in T2125 in minutes.
Download Tripbook from the App Store to make sure every vehicle expense on your T2125 is backed by a documented, CRA-compliant kilometre log.
