A travel logbook: Who should keep one and why?
Whether you are an employee, employer, a shareholder or self-employed worker, there are many reasons to keep a travel logbook.
Moreover, keeping a logbook is a requirement for employees who benefit from an employer-provided automobile. In the event of non-compliance, these employees could be subject to penalties in Quebec.
Automobile made available to an employee
When an automobile is made available to an employee,1 the employer must generally calculate 2 taxable benefits and include them in the employee’s income:2
- a standby charge benefit, calculated based on the period the automobile is available to the employee for personal use, regardless of whether the automobile is used for such purposes; and
- an operating cost benefit, calculated based on the employee’s personal use of the vehicle.3
Requirements to withhold and remit
An employer is also required to withhold amounts for income tax and Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) purposes with respect to such taxable benefits.4 In addition, the employer is generally required to remit the GST/HST and QST on the taxable benefits mentioned above.
Information to be gathered
To ensure compliance with filing and remittance requirements, an employer must collect a host of very specific information, including:
- the original cost or leasing costs of each vehicle provided to employees;
- the operating costs incurred on each vehicle provided to employees;5
- a logbook of the amounts reimbursed by employees to the employer related to usage and operating costs for vehicles made available to them;
- the total number of kilometres driven by employees and the number of business-purpose kilometres.
Employee requirement to keep a logbook
Since 2005, all employees in Quebec who benefit from an employer-provided automobile are required to keep a travel logbook.
Employees who only use an automobile for personal use can simply record the number of days the vehicle was made available to them and the odometer reading at the beginning and end of the year (or the period during which the car was made available to them).
The logbook must be provided to the employer by January 10 of the following year if the car is available to the employee at the end of the year, or within 10 days of the end of the period the automobile was available. An employee who fails to comply with this requirement is subject to a $200 penalty.
Other situations requiring a logbook to be kept
Besides cases where automobiles are provided to employees by their employer, there are a number of situations where a vehicle is used partially for business purposes and partially for other purposes, including:
- shareholder officers, or a person related to them, who use a company vehicle for personal travel;
- self-employed workers who use their vehicle for business and personal travel;6
- employees who use their personal vehicle for business purposes and claim compensation from their employer or deduct automobile expenses from their taxable income calculation, as the case may be;
- rental property owners who use their vehicle to complete certain tasks to earn rental income.
In general, tax laws do not impose specific requirements for keeping a travel logbook in the above-mentioned circumstances. However, the tax authorities require all taxpayers to maintain logbooks so that their income taxes and taxes payable can be objectively determined. In addition, on several occasions, the courts have confirmed that keeping an adequate travel logbook is essential in preventing the tax authorities from challenging automobile expenses or taxable benefit amounts claimed in relation to the personal use of an automobile.
Thus, even though there is no legal obligation to keep a travel logbook, taxpayers are still responsible for providing sufficient proof to demonstrate that their claims relating to business use are accurate.
A detailed travel logbook
The best way to show the use of a vehicle is to maintain a detailed logbook documenting all the travel for the year, by indicating the following for each business trip:
- the date;
- the destination (client’s name and address);
- the purpose; and
- the kilometres travelled.
This information should be recorded separately for each vehicle used for business or personal travel, by noting the kilometres on the odometer at the beginning and end of the year. A logbook should also be kept to compile the operating costs for each vehicle.
Lastly, some tools are available on the market, such as Odotrack, which make it easy to gather the required information. Odotrack records the kilometres driven for business purposes by logging your trips using a GPS system and then transmitting the data to a centralized system through a cellular network.
Jean-François Thuot, CPA, CGA
Partner, Taxation Department
Raymond Chabot Grant Thornton
Member of the technical working group on taxation and commodity taxes of the Quebec CPA Order
1 Or a related person.
2 Generally, the value of the benefit should be estimated during the year and calculated accurately at year-end, with any necessary adjustments, when the actual information is available.
3 Benefit reduced by any reimbursement of expenses by the employee to the employer, within the prescribed timeframes.
4 No withholdings for Employment Insurance and the Québec Parental Insurance Plan are required on these taxable benefits.
5 Gas, maintenance and repair costs, vehicle registration fees, insurance premiums, etc.
6 Using a simplified logbook is possible in some cases.