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:
person v. business use of vehicle. Questions whether travel between home employment office and former regular place of employment is personal
Position:
question of fact
Reasons:
May be more than one regular workplace and the place from which an employee ordinarily performs the duties of employment may change from time to time. If an employee who regularly works from home is required to regularly and habitually attend staff or other meetings at the main office of the employer, it may be that the main office is also a location from which the employee regularly performs the duties of employment. The fact that an employee may report to the main office once or twice each month is of less importance than the regularity of the reporting and the nature of the duties carried out by the employee at that location. See 971397, 9414885 (refers to 911738, 921407, 912356 ec1522 a-6890ec1189 7-0890
971851
XXXXXXXXXX Sandra Short
(613) 957-2136
Attention: XXXXXXXXXX
October 6, 1997
Dear Sirs:
Re: Personal Use of Employer provided Motor Vehicle
This is in reply to your letter of July 4, 1997, concerning personal use of an employer-provided motor vehicle.
XXXXXXXXXX has significantly reduced the number of main offices and as a result a number of employees now routinely work from their homes. These employees are supplied with a company-owned vehicle for business purposes and the necessary office equipment so that they can complete their employment tasks from their residence.
Situation 1: You have asked that we advise whether a taxable benefit will result from the use of these vehicles if there is no travel between the normal place of work and the home office.
Situation 2: Employees may be asked to attend meetings at the remaining main offices on a periodic basis. This will require travel from their normal place of work to the main offices. You have expressed the view that such travel is not personal in nature and as a result will not result in a taxable benefit to the employees.
The Department's position regarding the computation of benefits relating to the use of employer provided vehicles is set out in Interpretation Bulletin IT-63R5 entitled "Benefits, Including Standby Charge for an Automobile, from the Personal use of a Motor Vehicle Supplied by an Employer - after 1992."
It is not clear from your correspondence whether the vehicles being supplied to the employees are automobiles or other motor vehicles which do not meet the definition of an "automobile" as defined in subsection 248(1) of the Income Tax Act (the "Act").
If the vehicle being provided to employees is an automobile, the value of the benefit derived by an employee from the personal use, and availability of, the employer's automobile is included in computing the employee's income. This value is an amount equal to the portion of those operating costs paid by the employer which related to the personal use by the employee plus a reasonable standby charge. In this regard, see paragraph 1 of the enclosed Bulletin.
If the vehicles being provided are, in fact, motor vehicles other than automobiles, then the provisions of the Act which are specific to employer-provided automobiles, i.e., the standby charge (paragraph 6(1)(e)) and the operating expense benefit (paragraph 6(1)(k)), are not applicable. The employee benefit in respect of personal use of the motor vehicle is included in income under the general provision of paragraph 6(1)(a) of the Act. See paragraphs 23 through 26 of the Bulletin. Although there is no standby charge for the availability of motor vehicles which are not automobiles, the issue of what constitutes personal use of a vehicle remains.
We address your specific concerns as follows:
Situation 1: A standby charge will be required to be included in the employees' income if the vehicle is an automobile. Refer to paragraph 8 of the Bulletin to see if a reduced standby charge is available. It is a question of fact as to which particular trips undertaken by an employee are personal in nature. If there is in fact no travel between the former regular place of work and the home office, then no benefit under either paragraph 6(1)(k) (automobile operating expense benefit) or 6(1)(a) (as a benefit which results from the personal use of a motor vehicle other than an automobile), is computed with respect to trips not made.
Situation 2:
Paragraph 5 of Interpretation Bulletin IT-63R5 states that "...in addition to what would obviously be considered use of a motor vehicle supplied by an employer that is not in connection with or in the course of the taxpayer's office or employment, i.e., personal use (e.g., vacation trips, personal shopping trips, etc.), such use includes travel between the employee's place of work and home, even though the employee may have to return to work after regular duty hours. An exception occurs, however, where (as required by the employer or with the employer's permission) the employee proceeds directly from home to a point of call other than the employer's place of business to which the employee reports regularly (e.g., to make repairs at customers' premises), or returns home from such a point. These particular trips are not considered to be of a personal nature."
The regular place of work is usually the location at or from which the employee performs the duties of employment. However, there may be more than one regular workplace and the place from which an employee performs the duties of employment may change from time to time. If an employee, whose regular place of work is the home office, is required to regularly and habitually attend staff or other meetings at the main office, it may be that the main office remains one of two locations from which the employee regularly performs the duties of employment. As a result, travel between such work locations may be viewed as personal in nature. The fact that an employee may report to the second work location once or twice each month is of less importance than the regularity of the reporting and the nature of the duties carried out the employee at that location.
We trust our comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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