CRA finds that a carpooling arrangement is inherently unreasonable under s. 6(1)(b)(x)

In order to encourage carpooling and have a positive effect on the environment, a company pays a car travel allowance as follows:

• Per kilometre rate: $0.50
• Additional allowance of $0.10 per kilometre for each additional person accompanying the driver.

In finding that the additional allowance rendered the total allowance as a taxable benefit, CRA stated:

[T]he two parts of the allowance constitute a single allowance since they relate to the same use of the vehicle. … [T]his allowance is deemed not to be reasonable under subparagraph 6(1)(b)(x) because the use of the vehicle is not determined solely on the basis of the number of kilometres driven to perform the duties of the employment.

Neal Armstrong. Summary of 29 November 2023 External T.I. 2019-0812661E5 F under s. 6(1)(b)(x).