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: How to treat the automobile benefit received by a business owner's spouse who is also an employee of the company.
Position: Question of fact.
Reasons: Based on the facts and whether subsection 15(5) would apply.
XXXXXXXXXX Joy Bertram
January 4, 2007
Re: Spousal Automobile Benefit
We are writing in response to your facsimile received May 16, 2006 inquiring how to treat the automobile benefit received by a business owner's spouse who is also an employee of the company. We apologize for the delay in responding.
We understand the facts to be as follows:
1. The company operates an automotive car dealership, in the business of selling and leasing vehicles.
2. Employees typically use several of the demo or fleet vehicles during the year.
3. The owner's spouse is currently employed by the company and is assigned an automobile, which she uses substantially for personal use.
4. Whether or not the spouse is an employee, you indicated that there would always be a company automobile available for personal use.
You have asked for our views on whether the automobile benefit should be included in the owner's income.
In the situation described above, it is our view that the automobile is provided to the spouse because of the relationship with the owner of the company. As such, the automobile benefit must be treated as income of the owner under subsection 15(1) of the Income Tax Act (the "Act"), pursuant to subsection 15(5).
The Agency's views on this issue are discussed in more detail in Interpretation Bulletin IT 63-R5, Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer - after 1992, which is available on our website at http://www.cra-arc.gc.ca/formspubs/menu-e.html. As noted in paragraph 18 of IT-63R5, subsection 15(5) of the Act provides that for the purpose of subsection 15(1), the value of a benefit must be included in a shareholder's income when an automobile is made available to a person related to the shareholder. The benefit is calculated using the same provisions of the Act that would apply as if an employee received the benefit.
We trust that these comments will be of assistance.
Business and Personal Section
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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