CRA Vehicle Expense Review: What They Ask For

A letter from the CRA asking you to support the motor vehicle expenses on your T2125 tends to be read as the start of an audit. Usually it is not. The CRA says so in plain words: when it selects your return for review, that "does not represent a tax audit". Most letters about a vehicle claim come from one of its review programs, which check that an amount is reported correctly and properly supported. The CRA first tries to verify a claim from the information it already has, and contacts you by telephone or in writing only if it needs more.

That does not make the letter unimportant. A review can end in a reassessment, and what you send in answer is the evidence the decision is made on. This page covers what a review is, what each vehicle document proves, how to answer, and what to do if the claim is reduced.

A review is not an audit

Canada's tax system runs on self-assessment, and the CRA checks returns through several review programs. The ones a vehicle claim is most likely to meet:

Program	When it happens	What it looks at
Pre-assessment Review	Before your notice of assessment is issued	Claims on the return, checked against supporting documents
Processing Review	After your notice of assessment is issued	The same kind of check, after the fact
Matching Program	After your notice of assessment is issued	Your return compared with information from third parties such as employers or financial institutions
Supplementary Examination	Before or after a notice of (re)assessment	Income, losses and deductions that need a more detailed examination
Request Verification	Before a notice of reassessment	A change you asked for, to check it is allowable and supported

The CRA says a return may be selected because of a mismatch with third-party slips, the types of deductions or credits claimed, your compliance history, or at random. A large vehicle claim is not an accusation. It is a deduction type, and the review checks whether it is supported.

An audit is a different process. The CRA chooses audit files by risk assessment, and an auditor contacts you by mail or phone to set a date, time and place. An audit is often done on site, at your home, your place of business or your representative's office, and the auditor can examine your business records, your personal records such as bank and credit card statements, and in some cases the records of family members. When an audit finds that your return should change, you get a proposal letter explaining why, and the CRA gives you 30 days to agree or disagree with it before the audit is finalized. If you disagree, you explain why to the auditor, with documents, and can take an unresolved issue to the auditor's team leader.

Either way, the question at the centre of a vehicle claim is the same. The CRA's motor vehicle records page says you can deduct motor vehicle expenses "only when they are reasonable and you have receipts to support them", and calls a logbook kept for the entire year "the best evidence" of business use.

What the letter asks for, and what each document proves

A review letter names the tax year, the claim and the documents it wants. For a vehicle claim, the request is drawn from the documents the claim is built on, and each one proves a different fact.

Your deduction is your actual vehicle costs multiplied by your business-use percentage (business kilometres divided by total kilometres), plus capital cost allowance calculated separately. Every document supports one piece of that sentence.

Document	What it proves	Where it lands on the T2125
Logbook of business trips (date, destination, purpose, kilometres)	Which trips were business, and the business kilometres	The top of the business-use fraction
Odometer readings at the start and end of the fiscal period	The total kilometres driven	The bottom of the fraction
Odometer readings on the day you bought, sold or traded a vehicle	How the year's kilometres split between two vehicles	A separate fraction per vehicle
Fuel, insurance, licence and registration, maintenance and repair receipts	The costs you incurred and that they were reasonable	Chart A, motor vehicle expenses
Purchase agreement or bill of sale	The capital cost, the date you acquired the vehicle, and what kind of vehicle it is	Capital cost allowance, and whether passenger-vehicle limits apply
Loan agreement and interest statements	The interest paid on money borrowed to buy the vehicle	Chart B for a passenger vehicle, then Chart A
Lease agreement	The lease payments, the manufacturer's suggested list price, the days leased, and whether taxes, insurance or maintenance are included in the payment	Chart C for a passenger vehicle, then Chart A
Bank and card statements	That a payment was made (the CRA may ask for statements as well as receipts)	Backs up any line above

The logbook and the odometer are one piece of evidence, not two. The log gives the numerator and the odometer gives the denominator. A log with no year-end odometer readings cannot produce a percentage, and odometer readings with no log cannot say what share was business. The CRA asks for both: a log entry for each business trip, and the odometer reading of each vehicle at the start and end of the fiscal period. What a full log contains is covered in the logbook requirements guide, and why the year-end readings matter so much has its own post.

Receipts prove costs, not use. A folder of fuel receipts shows you bought fuel. It says nothing about why you drove. If the log is weak, a perfect set of receipts still leaves the percentage unsupported, and the percentage is what the whole claim is multiplied by.

If you use more than one vehicle for the business, the CRA expects a separate record for each vehicle, with its own total and business kilometres and its own costs.

How to answer, and by when

The CRA's instructions for answering a review are short, and worth following exactly.

1. Answer within the time frame stated in the letter. The deadline is in your letter. The CRA does not publish a single response window for reviews, so read the letter rather than relying on a figure you have seen elsewhere.
2. Quote the reference number from the upper right corner of the letter on everything you send.
3. Send the receipts and documents the letter asks for that apply to your situation. Answer the question asked, not every question you can think of.
4. Send it online if you can. Through My Account for Individuals (or Represent a Client, for an authorized representative), choose "Submit documents", enter the tax year and the reference number, and upload scans. You keep your originals and receive a confirmation number, which you should keep.
5. If you need more time, call before the deadline, at the number in your letter. The CRA asks you to call right away if you are running late or cannot get the documents by the due date.
6. If a document does not exist, say so. The CRA's instruction is to include a written explanation, or call the number on the letter, when receipts or documents to support the claim are not available.

Put a one-page cover note on top of a vehicle response. State the vehicle, the fiscal period, the start and end odometer readings, the business kilometres, the percentage, and how the percentage feeds the amount you claimed. The reviewer then has the arithmetic in front of them and can check each figure against the document behind it. If you kept a simplified logbook rather than a full one, include the base-year log and show the projection formula, because the three-month sample means nothing without the year it is measured against.

When the log is missing or weak

This is the case that turns a review into a reduction. The CRA's records guidance contemplates that business use may have to be determined from "alternative records" when a log does not cover the year, and it treats a full-year log as the best evidence, not the only evidence. What the CRA's review pages add is practical: if documents are not available, explain in writing.

What you should not do is write a log now and send it as if it had been kept at the time. If you have to rebuild the year, rebuild it from records that were created as you drove (invoices with client addresses, calendar entries, location history, service invoices that show the odometer), label it as a reconstruction dated the day you prepared it, and let the result be whatever the evidence supports. How to rebuild a mileage log the CRA can accept covers the method, how to recover missing odometer readings, and what the Tax Court has done with reconstructions that worked and ones that did not.

Be ready for the supported percentage to be lower than the one you filed.

After the review: reassessment

If a review changes your claim and that changes your tax, the CRA issues a notice of reassessment.

How far back can the CRA go? For an individual, the Income Tax Act sets a normal reassessment period that ends three years after the day the notice of original assessment for the year was sent (section 152(3.1)). After that, the CRA can reassess only in listed situations, including where the taxpayer made a misrepresentation attributable to neglect, carelessness or wilful default, committed fraud, or filed a waiver (section 152(4)). That is one reason the Act requires you to keep records for six years from the end of the last tax year they relate to (section 230(4)), and the CRA's records page adds that a base-year logbook is kept for six years from the end of the last tax year it is used to establish business use.

If you find more documents after a claim was changed by a review, the CRA says it accepts new submissions and will review the claim again, and its online submission page allows additional information after a review is completed as long as it has been less than three years since the date of the notice of reassessment. The CRA also recommends calling or writing to it about a reassessment you disagree with before filing an objection.

The objection route and its deadline

If you disagree with a reassessment on the merits, the formal step is a notice of objection. The deadline for an individual (other than a trust) is in section 165(1)(a) of the Income Tax Act: the later of

• one year after your filing-due date for the year, and
• 90 days after the day the notice of reassessment was sent.

For most self-employed individuals the filing-due date is June 15 of the following year (section 150(1)(d)(ii)), so the one-year limb runs to June 15 of the second year after the tax year. The CRA describes the second limb as 90 days from the date of your notice.

Worked example: two reassessments of a 2025 vehicle claim

A sole proprietor with a December year end files the 2025 return. The filing-due date for 2025 is June 15, 2026, so one year after it is June 15, 2027.

Notice of reassessment dated	90 days later	One year after the 2025 filing-due date	Objection deadline (the later)
March 2, 2027	May 31, 2027	June 15, 2027	June 15, 2027
May 3, 2028	August 1, 2028	June 15, 2027	August 1, 2028

In the second row the one-year limb has already passed, so 90 days is all there is. Count from the date on your notice, not from when you opened it.

How to file. Online through My Account ("Register my formal dispute"), or on Form T400A or a signed letter setting out the facts and reasons, sent to the Chief of Appeals. Include the date and tax year of the notice, the facts and reasons, and copies of every document that supports your position. An appeals officer who reviews it may contact you, and you can ask for the auditor's reports and working papers relevant to your dispute.

One detail is easy to miss. The CRA says that if you did not provide information during an audit or in response to its request, and provide it for the first time with your objection, the information may be sent back to the area that issued the assessment for a second review. Answering the original letter fully is the faster road.

If you miss the deadline. You can apply for an extension, as soon as possible and no later than one year after the date the objection was due, showing the conditions the CRA lists in its guide to objections.

After the objection. If the CRA confirms the reassessment, you can appeal to the Tax Court of Canada within 90 days of the day the notice of its decision was sent. If the CRA has not decided your objection within 90 days of filing it, you can appeal without waiting (section 169(1)).

How to make the next review short

A review asks a narrow question, and a record made at the time answers it in one upload.

• Read the odometer at the start and end of every fiscal period, and photograph it. It is the denominator of the whole claim.
• Log every business trip as it happens, with the purpose. Commuting from home to a regular place of business is personal; see commuting versus business driving before you label the trips you make most often.
• Keep the vehicle's paperwork with the log: the purchase or lease agreement, the loan statements, and the receipts, per vehicle.
• Know what your percentage is worth. A sole proprietor claims actual costs times the business-use percentage on the T2125. The CRA per-kilometre rate is the ceiling on an allowance a payer pays you, not a deduction for your own driving; the mileage calculator shows both on your own numbers.

If you would rather not keep the log by hand, Claimable Drive, in beta for iPhone, records drives in the background and you swipe each one business or personal.

FAQ

Is a CRA review letter the same as an audit? No. The CRA says a review "does not represent a tax audit". Reviews check that specific amounts are reported correctly and supported, usually by asking for documents. An audit is a closer examination of your books and records, chosen by risk assessment, often done on site, and it ends with a proposal letter if the auditor thinks your return should change.

How long do I have to answer a CRA review letter? The time frame is stated in your letter, and the CRA asks you to reply within it. If you need more time, call the number in the letter before the deadline. An audit proposal letter is different: the CRA gives you 30 days to agree or disagree with it.

What does the CRA ask for in a vehicle expense review? Whatever the letter names. For a vehicle claim that is typically drawn from the logbook, the start and end odometer readings, the receipts behind each expense, and the purchase, loan or lease documents for the vehicle. Each proves something different, which is why a pile of receipts does not replace a log.

What if I never kept a logbook? Tell the CRA in writing, and send what you do have. If you rebuild the year, rebuild it from records created at the time and label it as a reconstruction. Expect the claim to be measured against what the evidence supports, which may be less than you filed.

How long do I have to object to a reassessment? For an individual, the later of one year after your filing-due date for the year and 90 days after the notice of reassessment was sent (Income Tax Act, section 165(1)(a)). For most self-employed individuals, the filing-due date is June 15 of the year after the tax year.

Can I send more documents after my claim was reduced? Yes. The CRA says it accepts new submissions after a review and will look at the claim again, and online submission is available if it has been less than three years since the date of the notice of reassessment. That is often quicker than a formal objection when the issue was missing paper.

Sources

1. CRA, Review of your tax return by the CRA, self-assessment, and a review "does not represent a tax audit".
2. CRA, Types of review, when each review program takes place and what it checks.
3. CRA, How tax returns are selected for review, the reasons for selection and the six-year recommendation.
4. CRA, Responding to us, reply within the time frame in the letter, quote the reference number, explain missing documents, and new submissions after a review.
5. CRA, Income tax review? You've got this!, calling right away when you need more time.
6. CRA, Submitting documents online, the My Account steps, and additional information within three years of the notice of reassessment.
7. CRA, RC4188, What you should know about audits, how audits are chosen and run, what an auditor examines, and the 30-day proposal letter.
8. CRA, Motor vehicle records, the logbook as the best evidence, the odometer readings, the per-vehicle record, alternative records, and base-year retention.
9. CRA, Motor vehicle deductible expenses, the expenses claimed in Chart A, and capital cost allowance on its own line.
10. CRA, Motor vehicle leasing costs and Motor vehicle interest, the inputs to Charts C and B.
11. CRA, P148, Resolving your dispute: Objection and appeal rights under the Income Tax Act, objection deadlines, how to file, extensions, information first provided at objection, and appeals to the Tax Court.
12. Income Tax Act, section 165, the objection deadline in subsection 165(1).
13. Income Tax Act, section 152, the normal reassessment period in subsections 152(3.1) and 152(4).
14. Income Tax Act, section 150, the June 15 filing-due date for an individual who carried on a business, in subparagraph 150(1)(d)(ii).
15. Income Tax Act, section 169, appeals to the Tax Court of Canada.
16. Income Tax Act, section 230, the duty to keep records and the six-year retention period.