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: An employee drives an employer-owned vehicle to an individual job site then arrives at work later in the day. What portion of the travel is personal, resulting in a taxable benefit to the employee?
Position: The travel between home and a regular work location is personal travel, unless the exception in paragraph 5 of IT-63R5 is met. Travel during the day between regular work locations is business travel. Personal travel impacts the calculation of the taxable benefits under subsection 6(1) of the Act.
Reasons: Long-standing position
2004-010304
XXXXXXXXXX Patricia Taylor
952-8806
February 14, 2004
Dear XXXXXXXXXX:
Re: Motor Vehicle Benefits
We are writing in response to your letter of October 27, 2004, wherein you indicated that XXXXXXXXXX is reporting taxable benefits for their employees who use county vehicles to go to the job site. You requested clarification as to whether a taxable benefit arises in the situation where an employee drives to an individual job site and then arrives at work later in the day. You have also asked for information on what makes the taxable benefit exempt for employees who drive employer vehicles.
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 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. We are, however, prepared to provide the following general comments.
Whether or not a motor vehicle is used for personal purposes can only be determined after considering all the facts. Our general position of what constitutes personal use of an employer-provided vehicle is is described in Interpretation Bulletin IT-63R5, Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer - after 1992 ("IT-63R5"). Generally, personal use of an employer-provided vehicle includes travel between the employee's place of work and home, or between home and a work site that is a regular work location of the employer. Any location at or from which the employee regularly reports for work or performs the duties of employment is generally considered a regular place of employment. An employee can have more than one regular place of employment, which can change from time to time because of the nature of the employment situation.
An exception to this general rule is discussed in paragraph 5 of IT-63R5. 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. Also, where privately owned motor vehicles are prohibited from entering a restricted area where the employment duties are performed, and the distances to be travelled within the restricted area are such that a motor vehicle is necessary, the use and availability of the employer's motor vehicle within the restricted area is not considered to be for personal use.
In the scenario you described, the travel between home and the job site that is a regular work location of the employer is considered personal use of the motor vehicle. The travel from this job site to the employer's head office later in the day is considered travel for business purposes. The travel from the employer's head office to home at the end of the day is considered personal use of the motor vehicle.
As discussed in our previous letter to you, document 2004-010708, dated January 20, 2005, making a motor vehicle available for the employee's personal use results in a taxable benefit that must be included in the employee's income. Where the county vehicle is in all likelihood an automobile as defined in subsection 248(1) of the Income Tax Act (the "Act"), the personal travel mentioned above impacts the calculation of the "stand-by charge" and the "operating cost" benefits under paragraphs 6(1)(e) and 6(1)(k) of the Act, respectively.
We trust these comments are 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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