Is Parking Tax Deductible in Canada? Tolls and Tickets

Most of what it costs to run a car goes through one calculation on your T2125: add up the costs, multiply by your business-use percentage, claim the result. Fuel, insurance, repairs and the rest all work that way.

The small costs around the drive do not. Business parking skips the percentage and is deducted in full. A parking ticket incurred on the same business trip is not deductible at all, not even in part. And tolls, which feel like they should sit right beside parking, are not named anywhere in the CRA's motor vehicle guidance for the self-employed.

The usual mistake is to throw them all into the prorated total, which shaves your parking and quietly claims part of your tickets. This page takes each cost in turn, with its authority and its line on the form.

The two costs that skip the percentage

The CRA's T2125 page on motor vehicle expenses says it in one breath, and Guide T4002 repeats it almost word for word:

"If you use a motor vehicle or passenger vehicle for business and personal use, you can deduct only the part of the expenses that you paid to earn income. However, you can deduct the full amount of parking fees related to your business activities and supplementary business insurance for your motor vehicle or passenger vehicle."

So there are exactly two vehicle costs the CRA carves out of the proration:

1. Parking fees related to your business activities.
2. Supplementary business insurance for the vehicle.

The form builds this in. Chart A on the T2125 adds up your operating costs, multiplies the total by business kilometres over total kilometres (amount 13), and only then adds business parking fees (amount 14) and supplementary business insurance (amount 15). Amount 16, the sum of 13 to 15, is what goes on line 9281.

Your fuel bill mixes business and personal driving, so the percentage is how you separate them. A business parking fee is already separated, so scaling it would take away part of a cost that was never personal.

The CRA's own example makes the point with small numbers. A van used 27,000 of 30,000 kilometres for business has $5,400 of expenses, and 27,000 ÷ 30,000 × $5,400 gives $4,860. The owner also paid $40 of business parking and $100 of supplementary business insurance, and those are added on top, in full, for a claim of $5,000.

Your ordinary insurance still gets the percentage

Do not read "supplementary business insurance" as "insurance". Your car's ordinary policy is on its own line in Chart A (amount 5, Insurance) and is prorated like fuel. Amount 15 is only for supplementary business insurance, which the CRA lists separately and does not define further in T4002. If you only have an ordinary policy, amount 15 is empty.

Which parking counts as business parking

The CRA's phrase is "parking fees related to your business activities". The easy cases fit that without argument:

• Parking at a client's office, a customer's home, or a job site.
• Parking at a supplier while you pick up materials.
• A meter while you drop off a delivery or attend a meeting.

The harder case is parking at your own regular place of business, such as the lot next to a studio you rent or the garage under the office you work from every day.

The CRA's T2125 pages do not address that case in words. What the CRA does say is about the drive: Interpretation Bulletin IT-521R, paragraph 24, treats travel between your home and your place of business as personal unless your home is the base of your business operations. Parking that exists only because of that daily trip sits close to the commute, and it is not something to assume is covered by "parking related to your business activities". This is a genuinely fact-dependent question, and the answer turns on the same facts as the commute itself, which the commuting guide works through trip by trip.

Two things are not in doubt either way:

• Parking on a personal trip (the grocery store, the gym, a night out) is personal. It is not business parking because the car is also a business car.
• A monthly parking pass that covers both business and personal parking is not all business parking. Only the part related to your business activities is.

Tolls: what the CRA says, and what it does not

The CRA's motor vehicle guidance for the T2125 lists what goes into the chart (licence and registration, fuel and oil, electricity for zero-emission vehicles, insurance, interest, maintenance and repairs, leasing) and names business parking and supplementary business insurance as the two costs taken in full. Tolls are not on either list. Chart A has no line for them.

The only place the Income Tax Act names tolls in a vehicle context is paragraph 6(1)(b), about employee allowances. Subparagraph (xi) says an allowance stops being a reasonable per-kilometre allowance if the employee is also reimbursed for the same use, "except where the reimbursement is in respect of supplementary business insurance or toll or ferry charges and the amount of the allowance was determined without reference to those reimbursed expenses." That is a rule about what an employer can reimburse beside an allowance, and the per-kilometre allowance guide covers it. It is not a rule about how a sole proprietor deducts a toll.

So for your T2125, tolls fall to the general rules in section 18 of the Act:

• Paragraph 18(1)(a) allows an outlay only to the extent it was made "for the purpose of gaining or producing income from the business".
• Paragraph 18(1)(h) denies "personal or living expenses".

Applied to a toll, that gives a clear principle even without a CRA line. A toll is charged for one trip. If the trip was business, the toll was paid to earn income. If the trip was personal, the toll is a personal expense. A 407 ETR charge for a drive to a client is a business cost; the same charge for a weekend drive to the cottage is not.

What the CRA has not said is how it wants that reported. There are two ways to do it that respect the principle:

1. Put every toll you paid into Chart A under "Other expenses (specify)". The percentage then removes the personal share along with your fuel. This is an approximation: if your tolls are mostly on business trips and your driving is mostly not, it under-claims.
2. Claim only the tolls from business trips. That total is already business-only, so it must not be scaled by the percentage a second time. Chart A's only full-amount lines are business parking and supplementary insurance, so a business-only toll total does not belong inside the prorated part of the chart. The T2125's general line for an expense with no line of its own is line 9270, other expenses, where you name what it is.

Whichever you choose, the record is the same: the toll statement, and a log that shows which trips were business. See what counts as a business trip for the test the trip itself has to pass.

Tickets: not deductible, in full, by statute

This is the one on the page with no judgment call in it. Section 67.6 of the Income Tax Act says:

"In computing income, no deduction shall be made in respect of any amount that is a fine or penalty (other than a prescribed fine or penalty) imposed under a law of a country or of a political subdivision of a country (including a state, province or territory) by any person or public body that has authority to impose the fine or penalty."

A few things in that sentence matter for drivers.

It is a complete denial, not a reduction. There is no percentage and no business share. A parking ticket you got while visiting a client is exactly as non-deductible as one you got at the movies.

It covers the tickets drivers actually get. A speeding ticket is imposed under a provincial statute. A parking ticket from a city is imposed under a municipal by-law. The CRA's Income Tax Folio S4-F2-C1 reads section 67.6 as applying to a fine or penalty "imposed under a federal, provincial, municipal, or foreign law" by a person or body with authority to impose it, which takes in both. Guide T4002 lists "most fines and penalties imposed, under the law of Canada or a province or a foreign country" among the things not to include in your expenses.

The only exception is irrelevant to drivers. The one prescribed fine or penalty, per the Folio (paragraph 1.6), is a penalty under paragraph 110.1(1)(a) of the Excise Act.

A charge from a private lot is a different question. Some private parking operators send a notice demanding payment for overstaying or not paying. That is not a fine imposed under a law. The Folio (paragraph 1.7) says section 67.6 does not prohibit the deduction of "penalties or damages paid under a private contract". That does not make such a charge deductible; it means section 67.6 is not what decides it, and the ordinary tests (incurred to earn income, not personal, reasonable) do. The Folio's own summary is that the deductibility of a fine or penalty "can only be determined after examining all the relevant facts."

The practical rule: tickets from a city, a province or the police never reach the T2125. Do not let them into Chart A under maintenance or "other", where the percentage would quietly claim a share of them.

Car washes and the rest of the operating costs

The archived Interpretation Bulletin IT-521R, which Guide T4002 points to for more on motor vehicle expenses, defines operating expenses in paragraph 5 as including "maintenance (for example, car washes, grease, oil and servicing charges)". So a car wash is maintenance. It goes on the Maintenance and repairs line of Chart A and is prorated by your business-use percentage like an oil change. It is not a full-amount cost, however business-like the car is.

The same goes for the rest of the running costs Chart A names: fuel and oil, electricity for a zero-emission vehicle, insurance, licence and registration, maintenance and repairs, interest (subject to Chart B for a passenger vehicle) and leasing (subject to Chart C). All of them are multiplied by the percentage. How to arrive at the percentage in the first place is its own guide.

The whole list in one table

Cost	How it is deducted	Where it goes on the T2125	Authority
Parking on a business trip (client, job site, supplier)	In full	Chart A, amount 14, business parking fees	CRA T2125 pages, T4002
Parking at your own regular place of business	Fact-dependent; do not assume it is business parking	Amount 14 only if it is related to your business activities	CRA T2125 pages, IT-521R ¶24 on the commute
Parking on a personal trip	Not deductible	Nowhere	ITA 18(1)(h)
Ordinary vehicle insurance	By the percentage	Chart A, amount 5, insurance	T4002, Chart A
Supplementary business insurance	In full	Chart A, amount 15	CRA T2125 pages, T4002
Toll on a business trip	Business expense under general principles; the CRA names no method	Chart A "Other expenses (specify)" with all tolls, prorated; or business tolls only on line 9270, not prorated	ITA 18(1)(a)
Toll on a personal trip	Not deductible	Nowhere, unless included in a prorated total as above	ITA 18(1)(h)
Parking ticket (municipal)	Not deductible at all	Nowhere	ITA 67.6
Speeding or other traffic ticket	Not deductible at all	Nowhere	ITA 67.6
Private lot "parking charge"	Not caught by 67.6; ordinary tests decide it	Fact-dependent	Folio S4-F2-C1 ¶1.7
Car wash	By the percentage, as maintenance	Chart A, maintenance and repairs	IT-521R ¶5 (archived)

Worked example: one year, sorted properly

A self-employed renovator with a December 31 year end drives one car. Her logbook shows 18,000 business kilometres out of 24,000 total, so her business-use percentage is 18,000 ÷ 24,000 = 75%.

Her receipts for the year:

Receipt	Amount
Fuel	$3,200
Insurance (ordinary policy)	$2,000
Licence and registration	$120
Maintenance and repairs, including $180 of car washes	$680
Parking at clients' homes and job sites	$360
Supplementary business insurance	$150
407 ETR tolls on trips to clients	$220
407 ETR tolls on personal trips	$90
Two parking tickets outside job sites	$75
One speeding ticket on the way to a client	$140

Chart A, done right. The prorated costs are fuel, insurance, licence and maintenance: $3,200 + $2,000 + $120 + $680 = $6,000. At 75%, that is $4,500 (amount 13). Business parking of $360 goes on amount 14 and supplementary business insurance of $150 on amount 15, both in full. Amount 16, carried to line 9281, is $4,500 + $360 + $150 = $5,010.

Tolls. She keeps her 407 statements and her log, so she claims only the $220 of business-trip tolls, on line 9270, named, not prorated. The $90 of personal tolls is not claimed.

Tickets. The $75 and the $140 go nowhere. Both are fines imposed under a law, and section 67.6 denies the whole amount even though every one of them happened on business trips.

Now the same receipts, thrown into one pile and run through the percentage:

	Sorted properly	Everything prorated
Operating costs ($6,000)	$4,500	$4,500
Business parking ($360)	$360	$270
Supplementary business insurance ($150)	$150	$112.50
Tolls	$220 (business only)	$232.50 (all $310 at 75%)
Tickets ($215)	$0	$161.25
Total claimed	$5,230	$5,276.25

The pile gives a slightly higher total, and that is the problem with it. It under-claims the two costs the CRA says to take in full (by $127.50 between them) and makes up the difference with $161.25 of tickets the Act says are not deductible at all. A reviewer who finds the tickets in the claim removes them, and the parking and insurance you under-claimed stay under-claimed unless you ask for them back.

Keeping the records

Parking and tolls are the costs most often paid in cash or by tap, with the receipt thrown away in the car. The claim for them rests on two things together: the receipt or statement showing what you paid, and a log showing the trip was business. A parking receipt from downtown on a Tuesday means little on its own; beside a logbook entry for a client visit that day, it is the whole case.

Claimable Drive records your drives in the background and you swipe each one business or personal, so the business trips are already marked when a toll statement or a parking receipt needs matching to them. For everything else a logbook has to hold, see the CRA's logbook requirements, and for how these costs fit into the rest of your vehicle claim, vehicle expense tracking for the self-employed.

FAQ

Is business parking deducted at 100% or by my business-use percentage? In full. The CRA says you can deduct the full amount of parking fees related to your business activities, and Chart A adds business parking (amount 14) after the percentage has been applied to your other costs.

Are parking tickets tax deductible in Canada? No. Section 67.6 of the Income Tax Act denies any deduction for a fine or penalty imposed under a law by a person or body with authority to impose it, which includes a city's parking ticket. It does not matter that you got it on a business trip.

Is a speeding ticket deductible if I was driving for work? No, for the same reason. It is a fine imposed under a provincial law, and section 67.6 denies the whole amount.

Can I deduct 407 ETR tolls? A toll paid on a business trip is an expense incurred to earn income under paragraph 18(1)(a), and a toll on a personal trip is a personal expense. The CRA does not name tolls in its T2125 vehicle guidance or give them a line in Chart A, so either include all your tolls in Chart A's "Other expenses" line and let the percentage prorate them, or claim only the business-trip tolls, unprorated, on line 9270.

Is the insurance on my car deducted in full? Your ordinary policy is not. It goes on the insurance line of Chart A and is prorated. Only supplementary business insurance is deducted in full, on its own line (amount 15).

Where does a partner claim parking for a personal car used in the partnership's business? The CRA's T2125 page says a partner who incurs motor vehicle expenses for the business through a personal vehicle claims those business-related expenses on line 9943, other amounts deductible from your share of the net partnership income (loss).

Are car washes deductible? Yes, as maintenance, prorated by your business-use percentage. The archived IT-521R lists car washes as an example of maintenance within operating expenses.

Sources

1. CRA, Motor vehicle expenses (not including CCA), business parking and supplementary business insurance deducted in full, and line 9943 for partners.
2. CRA, Calculating motor vehicle expenses, the worked van example with parking and supplementary insurance added after the proration.
3. CRA Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income, line 9281 deductible expenses, the full-amount rule, and "most fines and penalties" among expenses not to include.
4. CRA Form T2125, Statement of Business or Professional Activities, Chart A (amounts 13 to 16) and line 9270.
5. Income Tax Act, section 67.6, fines and penalties.
6. Income Tax Act, section 18, paragraphs 18(1)(a) and 18(1)(h).
7. Income Tax Act, section 6, subparagraph 6(1)(b)(xi), toll and ferry charges beside an employee's allowance.
8. CRA, Income Tax Folio S4-F2-C1, Deductibility of Fines and Penalties, paragraphs 1.3 to 1.7.
9. Interpretation Bulletin IT-521R, Motor Vehicle Expenses Claimed by Self-Employed Individuals, archived, paragraph 5 (car washes as maintenance) and paragraph 24 (travel between home and place of business).