13 September 2000 External T.I. 2000-0032775 - STANDBY CHARGE

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 an extra cab pick-up truck is an "automobile" within the meaning thereof in subsection 248(1) of the Act.

Position: Question of fact.

Reasons: The definition of "automobile" includes certain exceptions. Whether or not these exceptions apply will be relevant to the determination.

XXXXXXXXXX 							2000-003277
A. Seidel
Attention: XXXXXXXXXX 

September 13, 2000

Dear Sir:

Re: Standby Charge - Extra Cab Pick-up Truck

This is in reply to your facsimile dated June 19, 2000 in which you requested our views as to whether a standby charge would be applicable in respect of an employer-provided extra cab pick-up truck in the situation where the back seat is removed resulting in a seating capacity of a maximum of 2 people.

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 ("IC-6R3"), it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate district tax services office for their views. However, we are prepared to offer the following general comments which may be of assistance.

The definition of "automobile" in subsection 248(1) of the Income Tax Act (the "Act") refers, in part, to a motor vehicle that has a seating capacity for not more than the driver and 8 passengers but subparagraph (e)(ii) excludes a motor vehicle of a type commonly called a van or pick-up truck or a similar vehicle that has a seating capacity for not more than the driver and 2 passengers.

Our comments are made on the assumption that the back seat of the particular pick-up truck results in the vehicle having a seating capacity for more than just the driver and 2 passengers.

Where the rear seat of an extra cab pick-up truck has been removed, it is our general view that the vehicle would still be regarded as having a seating capacity for more than the driver and 2 passengers for the purposes of the above definition unless the removal of the rear seat could be said to have permanently altered the vehicle. Therefore, the standby charge provisions in paragraphs 6(1)(e) and 6(1)(k) of the Act would normally apply to the personal use of an extra cab pick-up truck.

Finally, in the situation where a particular motor vehicle being provided is not an automobile as defined under the Act, the provisions of paragraphs 6(1)(e) and 6(1)(k) of the Act would not be applicable. Instead, an employee benefit in respect of such a vehicle would be included in income under the general provisions of paragraph 6(1)(a) of the Act. Paragraph 23 of Interpretation Bulletin IT-63R5 provides a discussion of the calculation of the taxable benefit for the personal use of a motor vehicle other than an automobile.

The publications referred to in this letter may be obtained from your local tax services office or from our Internet web site (www.ccra-adrc.gc.ca).

Yours truly,

John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch