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: Whether standby charge should be applied to use of employer-provided vehicle between home and workplace if use forbidden after work hours or on week-ends.
Position: We have maintained the position that travel between home and workplace is of a personal nature and whether or not vehicle is used, once made available to the employee, subject to standby charge.
Reasons: The main purpose of the trips is considered to be personal.
2000-000496
XXXXXXXXXX M. Shea-DesRosiers
(613) 957-8953
March 21, 2000
Dear Sir:
This is in reply to your letter of January 13, 2000, wherein you express concern about the fairness of the calculation of the taxable benefit associated with the personal use of a government-owned vehicle. You specifically mention the level of automobile standby charge.
You state that your employer, the XXXXXXXXXX, has advised you that you will be taxed for the benefit of using a government vehicle to and from your home to your place of work. You agree with being charged a prescribed amount per kilometre for operating costs in connection with personal use. However, you object to the standby charge since you state that your employer does not allow you to use the vehicle after working hours or on week-ends and forbids the use of the vehicle at anytime to anyone except the employee, including relatives and family members.
The particular circumstances in your letter on which you have asked for our views appears to be a factual situation involving a specific taxpayer. As explained in Information Circular 70-6R3, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. However, we are prepared to offer the following general comments which may be of some assistance to you.
The value of the benefit derived by an employee from the personal use and availability of an automobile supplied by an employer is required to be included in calculating the employee's income. This value is an amount equal to a prescribed amount per kilometre for operating costs in connection with personal use and a "reasonable standby charge" (plus the equivalent to the Goods and Services Tax (GST) on the standby charge). In general, this standby charge is 2% per month of the cost of the automobile, or 2/3 of the lease costs calculated with reference to the number of days the automobile was available to the employee or to a person related to the employee. However, this standby charge may be reduced when the personal use is less than 1,000 kilometres a month and the business use portion of the total kilometres travelled is 90% or more. Further, provided the automobile is used primarily for business purposes, an amount equal to one-half of the standby charge benefit may be used as the amount of the operating costs benefit in lieu of the prescribed per kilometre calculation.
The Canada Customs and Revenue Agency (CCRA) takes the position, which is supported by the Courts, that travel between an employee's residence and his or her regular place of work is personal. An individual's place of work is considered to be the place where the individual reports for work. In our view, an employee's requirement to have an automobile available at all times, does not diminish the benefit received by the employee in being able to travel between home and the work place in an employer-provided automobile. Regardless of the use, or the non-use, of the automobile, once it has been made available to the employee, that individual is still subject to the standby charge for each day the vehicle is made available to him or her. Accordingly, in our view, an automobile is available for use by an employee as long as he has access to, or control over, the vehicle. Access is considered to end when an employee returns the keys of the automobile to the employer.
However, in cases where the personal use is restricted to the drive to and from work, there is an increased likelihood that the total personal kilometres will be sufficiently low as to entitle the employee to a reduced standby charge. We would recommend that employers and employees maintain detailed daily logs to support the amount of employment - related use.
CCRA only administers legislation as proposed by the Department of Finance and enacted by Parliament. Your comments regarding the fairness of income tax legislation relate to tax policy, which is the responsibility of the Department of Finance. We will advise our counterparts at the Department of Finance of your concerns. However, you should contact your local tax services office regarding any concerns which you may have with a particular assessment.
We trust our comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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