Fuel that runs your equipment is a business expense in its own right. On Form T2125 it goes on line 9224, Fuel costs (except motor vehicles) — everything that burns fuel for the business except the vehicle you drive.
What belongs here
- the cost of fuel used in your business, including gasoline, diesel, and propane
- motor oil and lubricants for that equipment
Think of a generator, a compressor, a mower, a heater on a job site.
What does not belong here
Fuel used in your motor vehicle. That is a claim within the vehicle schedule — line 9281, motor vehicle expenses, where Chart A works out the part you can deduct from the kilometres you drove to earn income. An ordinary fill-up at a service station belongs there, not here.
Fuel for a workspace in your home. The cost of fuel related to the business use of a workspace in your home has to be claimed as business-use-of-home expenses.
What to keep
Keep a record of all your income and expenses, with the documents behind them. A fuel receipt showing the seller, the date, and what was bought is enough — but note what the fuel was for while you still know, because the receipt itself looks the same whether the fuel went into a machine or a vehicle.
Don't send them in with your return. Keep them in case the Canada Revenue Agency (CRA) asks to see them. Business records follow the same six-year retention rule as your personal documents.
Official CRA sources
Source: Canada Revenue Agency (canada.ca). Not tax advice.