If you work in the construction trade, you are quite often self-employed. This will require you to file a self-assessment form to estimate the tax you owe.
As you calculate your estimated tax, there are a number of expenses that you are entitled to claim. This article will help you properly account for those expenses related to your daily travel so you can minimize the tax you pay and maximize your return.
Types of Travel Expenses
For starters, there are two types of travel expenses. These will need to be accounted for in different sections of your tax return.
• Work-related daily tax expenses
• Work-related overnight travel expenses
Work-Related Daily Tax Expenses
The most common expenses in this category are car expenses. These expenses will be different depending on whether the expenses occurred with a car or with another type of vehicle (e.g. van).
Where: Section D1 “Work-Related Travel Expenses
What you can claim: All kilometres that you traveled for business
How do you estimate:
The two most common methods of estimating your car expenses are either using the logbook method or estimating your cents per kilometer.
With this method, you must keep a logbook for your daily mileage, odometer records and all receipts/written proof of car expenses.
NOTE: You can use your odometer records to estimate oil and fuel expenses.
Cents Per Kilometre Method
This may be a good method if you don’t have extensive travel expenses since you can only claim the first 5,000 kilometres traveled. With this method, you will not be required to keep receipts or other written evidence like you would with the logbook method. However, you may be asked to explain how estimated your business travel costs (e.g. a diary or showing a regular pattern of travel to estimate costs).
Non-Car Travel Expenses
Where: Section D2 “ Work-Related Travel Expenses”
You will have to keep all your records pertaining to:
• Fuel and Oil
• Repairs and Service
• Loan Interest (if applicable)
• Lease Payments (if applicable)
Since you may use this vehicle for personal use, you will want to keep a journal or logbook to designate between personal and business travel.
Work-Related Overnight Travel Expenses
To list expenses under this category you must have had to travel to a job site and there was no reasonable expectation that you could travel to and from home.
If your travel meets these criteria, you are entitled to travel expenses that include:
• Meals, lodging, and incidental expenses
• Car, air, bus, train, ferry and taxi fares between locations
NOTE: You cannot claim overnight travel expenses if your employer is paying your expenses, if you are incurring travel expenses as a result of your choice not to relocate, or if you take up a temporary residence at the job site.
Other Daily Expenses
Where: Section D2 “Work-Related Travel Expenses”
There are three additional types of travel expenses that require proper record-keeping.
• Tolls (bridges and roads)
• Taxi and bus fares (for traveling to job sites)
In addition to your travel expenses there are other expenses you are allowed. Why not take a minute to ask a question. We’ll give you the advice you need.