If you use your vehicle in your employment or self-employment, and are claiming auto expenses when preparing your 2004 tax return, beware! Auto expenses can attract lots of attention from tax auditors, according to Evelyn Jacks, President of The Knowledge Bureau and author of Essential Tax Facts, her 35th book on personal tax filing.

“Especially if you use the same vehicle for both personal and employment or business use, you will be required to keep and show an auto log of all driving in the year to verify business or employment use,” says Mrs. Jacks . “Employees must also have their employers sign Form T2200 Declaration of Conditions of Employment.

Most people, however, have trouble keeping the auto log. This is a document (paper or electronic) that records distance driven for both purposes: personal use includes the use of your car by other family members, driving kids to hockey or dancing, driving Granpa to the eye doctor, picking up milk, lunch with personal friends or relatives, etc.

Employment or business use includes driving to and from appointments, picking up mail or office supplies, but not driving to and from your place of business or employment. In practice, according to Mrs. Jacks, very few 100% claims are allowed under the auto expense line item when a return is picked for audit.

“I have seen a couple in my experience in practice over the years, however, in each case, the taxpayer was able to show, definitively, that one car (or other mode of transportation) was used exclusively for personal matters and one only for employment/business purposes—no exceptions,” says Mrs. Jacks.

So what’s deductible? Unfortunately, no “cents-per-mile” claims are allowed. To make the claim for allowable auto expenses, receipts are gathered, and the expenses categorized into operating expenses like gas, oil and repairs, and fixed expenses like capital cost allowance, interest and leasing costs, which are restricted. . .then totalled and prorated for business/personal use.

For more information and to obtain a copy of Essential Tax Facts by Evelyn Jacks, call toll free 1-866-953-4769 or visit Evelyn’s website: www.knowledgebureau.com.