20 April 2001 External T.I. 2001-0073935 - PERSONAL USE OF AIRCRAFT

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: In calculating benefit on personal use of aircraft, can employer's entire fleet of aircraft be considered in determining extensive personal use?

Position: IT-160R3 sets out general guidelines. In determining whether an aircraft is used extensively for personal use, it is not appropriate to consider an employer's entire fleet of planes.

Reasons: If an employer owned several planes, by considering the total use of all aircraft, it would be almost impossible for an employee-shareholder to be considered to have used an aircraft extensively for personal use.

		2001-007393
XXXXXXXXXX 	Wayne Antle, CGA
(613) 957-2102
April 20, 2001

Dear XXXXXXXXXX:

Re: Guidelines on Personal Use of Aircraft

This is in reply to your letter of March 6, 2001 concerning the determination of taxable benefits for the personal use of an aircraft, where the employer owns more than one airplane.

Interpretation Bulletin IT-160R3, Personal Use of Aircraft, sets out general guidelines to assist in the determination of benefits arising from the personal use of an aircraft by an employee or shareholder. As noted in paragraph 1 of IT-160R3, the guidelines presented in the bulletin may not be applicable in all situations. The valuation of the taxable benefit is determined on the basis of what is reasonable in relation to the facts of each case and the purpose, whether business or personal, for which an aircraft is owned or leased.

Where an employer owns more than one aircraft and one of the airplanes is used by an employee extensively for personal travel, the determination of the benefit can only be made after reviewing all of the facts. This would include a review of the purpose for which the aircraft was acquired, the amount of personal use by the employee, the number of people accompanying the employee on each personal trip, whether the personal travel was on a business flight, and whether the airplane must make an unoccupied ("dead head") flight as a result of the employee's personal travel.

When an employee is also a shareholder of a corporation that he or she controls, or is part of a related group that controls the corporation, then the benefit derived from the personal use of an aircraft may be received by the individual in his or her capacity as a shareholder. As noted above for employees, this can only be determined after reviewing all of the facts including the amount of personal travel undertaken by the individual, the number of people accompanying the individual on the trips, and the purpose (business or personal) for which a particular aircraft was acquired.

In your letter, you suggest that we change the guidelines for extensive use set out in IT-160R3 to cover situations where a corporate employer owns directly, or through related corporations, more than one aircraft. In our view, it would be inappropriate to consider the employer's entire fleet of aircraft in order to determine if a particular aircraft was used extensively for personal use. As noted above, the valuation of any benefit derived from the personal use of an aircraft is ultimately determinable based on the facts of each particular case.

We trust that our comments will be of assistance.

Yours truly

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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