26 February 2003 External T.I. 2003-0001435 - EMPLOYER-PROVIDED PARKING

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 CCRA.

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

Principal Issues: Whether taxable employment benefit for employer-provided parking space should be reduced to account for times when the employee is unavailable to use the spot

Position: The benefit should not be reduced.

Reasons: The benefit arises from the spot being kept available for the employee's use.

XXXXXXXXXX 2003-000143
Wayne Antle, CGA
February 26, 2003

Dear XXXXXXXXXX:

Re: Taxable Benefit-Employer-Provided Parking

This is further to your letter of February 3, 2003, concerning whether the amount of a taxable employment benefit arising from an employer-provided parking space can be reduced to account for times when the employee is travelling out of town, and does not use the available space. You noted that a certain percentage of the employee's time is spent outside the metropolitan area in which the employer is located. The time is often spent in other cities to which the employee flies.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an Advance Income Tax Ruling request. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments.

Generally, the fair market value of an employer-provided parking space, minus any amount paid by the employee for use of the parking spot, is a taxable employment benefit. However, there is no taxable employment benefit when the employer provides a free parking space, or pays for a parking space for business reasons, and the employee is regularly required to use his or her vehicle (or a vehicle supplied by the employer) to carry out the duties of employment. The determination of whether an employee is regularly required to use a vehicle can only be made after reviewing all of the facts including the number of days in which the vehicle is required to be used for employment purposes throughout the year and the nature of the employment.

Where it is determined that the employee is not regularly required to use a vehicle for employment-related purposes, but needs the use of a parking space on occasions when he or she is required to use the vehicle to travel away from the office during the day for employment-related business reasons, then the employment benefit otherwise determined may be reduced on a reasonable basis to account for such use. For example, the parking benefit could be prorated on the basis of the number of days in the calendar year when the employee was required to use the vehicle during the workday, and therefore required the parking space for business reasons.

On the other hand, where the employer continues to pay for, or otherwise holds a parking space for the employee's use, it is our view that the taxable employment benefit should not be reduced to account for an employee being out of town and therefore, unable to use the parking spot.

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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