Quick answer
Fuel is claimed at the business-use percentage: business kilometres over total kilometres from your log, applied to the year’s fuel spend. The same percentage drives the GST/HST input tax credits, at whatever rate your province charges. Employees reimbursed at the CRA’s 73c/67c per-kilometre rates for 2026 have fuel covered inside the allowance and claim nothing more.
Is fuel tax deductible in Canada?
For the self-employed, yes at the business share. Canada has no flat-rate deduction method for the self-employed: the kilometre log is the whole system. Every vehicle cost, fuel first among them, is deductible in the proportion that business kilometres bear to total kilometres in the year, reported on Form T2125. The per-kilometre rates most people quote (73 cents for the first 5,000 km, 67 cents after, for 2026) are the ceiling for tax-free employer allowances, not a self-employed claiming method.
Employees sit in that allowance world by default: an employer paying the CRA reasonable rates covers fuel inside the allowance, tax-free, end of story. The exception is the T2200 route, where an employee required to use their own car without reasonable reimbursement deducts the employment share of actual costs, fuel included, on Form T777.
Commuting is personal in every version: home to the regular workplace burns personal fuel, and the log must say so.
How much can you claim?
Worked example: a self-employed home inspector spends $3,900 on gas in 2026. Her log shows 22,000 total kilometres, 15,400 of them business trips to inspections, a 70% business share. The fuel deduction is $2,730, claimed with the same 70% of insurance, repairs, licence, and capital cost allowance on the vehicle.
| Who | Fuel treatment |
|---|---|
| Self-employed | Business % of actual fuel via the log, on T2125 |
| Employee on CRA allowance (73c/67c) | Covered by the allowance; no claim |
| Employee with T2200, no reasonable allowance | Employment % of actual fuel on T777 |
| Corporation-owned vehicle | Corporation deducts; personal use becomes a taxable benefit |
GST/HST on fuel
A registrant claims input tax credits on the business share of fuel at the rate actually embedded in the price: 13% HST in Ontario, 15% in the Atlantic provinces, 5% GST in Alberta, and GST alongside provincial taxes in BC, Saskatchewan, Manitoba, and Quebec’s QST system. The log percentage does the apportionment. Keep the receipts; card statements alone do not establish the tax paid.
Record-keeping requirements
The CRA’s expectation is a trip log (date, destination, purpose, kilometres) plus opening and closing odometer readings, plus receipts, kept six years. After a full 12-month logbook establishes your base pattern, the CRA accepts a simplified three-month sample log in later years provided usage stays within 10 percentage points of the base year. Most challenges to vehicle claims are really challenges to the log.
How to claim, step by step
- Keep the kilometre log all year and record the odometer at January 1 and December 31.
- Collect every fuel receipt; capture them digitally at the pump rather than at year end.
- Compute the business percentage: business km over total km.
- Apply it to total fuel and oil, and enter the result on the motor vehicle line of T2125 (or T777 for eligible employees, with the signed T2200).
- Claim ITCs on the business share of the GST/HST actually paid, per province, on each return.
- Keep the log, odometer readings, and receipts for six years.
Common mistakes
- Claiming 100% of fuel for a vehicle that also drives the family.
- Counting the commute as business kilometres.
- An employee claiming fuel while also receiving the reasonable per-kilometre allowance.
- ITCs claimed at the wrong provincial rate, or without receipts.
- A logbook invented in April for the year before.
Software that helps
- MileIQ logs trips automatically and splits business from personal with a swipe.
- ExpenseFlow captures fuel receipts as they happen, applies the correct provincial GST/HST treatment to the business share, flags vehicle costs for apportionment rather than a 100% claim, and syncs approved spend to Xero or QuickBooks with the receipt attached.
- QuickBooks mileage tracking pairs the trips with the fuel spend for the T2125 numbers.
FAQ
See the answered questions above for the self-employed method, employees, ITCs, commuting, and records.
From ExpenseFlow
GST/HST coding on autopilot
ExpenseFlow reads every receipt, assigns the right GST/HST treatment and account code, and syncs to Xero or QuickBooks Online once you approve.