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.
Principal Issues: What constitutes regular employment-related use of an employer-provided parking space?
Position: Question of fact.
Reasons: Where an employee is required to use his or her vehicle 3 or more days on a weekly basis for employment-related travel and requires the parking space for this purpose, the parking space would be considered to be used regularly for employment-related reasons.
Randy Hewlett, B.Comm.
XXXXXXXXXX 613-941-7239
2004-010115
November 26, 2004
Dear XXXXXXXXXX:
Re: Taxable Benefit Employer-Provided Parking
We are writing in response to your letter of November 1, 2004, wherein you asked for our opinion on the above-noted issue.
Your letter indicated that your employer provides you with a free parking space at your regular place of employment because you are required to use your personal motor vehicle for employment-related travel. You travel in and around the metropolitan area where your employer is located at least 3 to 4 times a week. You inquired whether the employer-provided parking would constitute a taxable benefit in such circumstances.
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 submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following general comments.
Paragraph 6(1)(a) of the Income Tax Act (the "Act") includes in a taxpayer's income the "value of board, lodging and other benefits of any kind whatever received or enjoyed by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment." The policy of the Canada Revenue Agency on the taxable status of employer-provided parking is outlined in the section 2.14 of the Employers' Guide: Taxable Benefits 2003-2004 (the "Guide").
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 under paragraph 6(1)(a) of the Act. 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. In our view, if an employee is required to use his or her vehicle 3 or more days on a weekly basis for employment-related travel and requires the parking space for this purpose, the parking space would be considered to be used regularly for employment-related reasons. Therefore, the employee would not be in receipt of taxable benefit.
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.
We trust our comments will be of assistance to you.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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