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 is a taxable benefit assessed for an employee's personal use of an employer rented vehicle?
Position: Stand-by charge applies.
Reasons: Legislation
Shaun Harkin, CMA
XXXXXXXXXX (613) 957-9229
2007-022803
December 5, 2007
Re: Technical Interpretation Request - Vehicle Taxable Benefit
This is in response to your letter of March 20, 2007, wherein you asked how a taxable benefit would be calculated for an employee's use of an employer rented automobile that was used for both business and personal use.
The value of a benefit derived by an employee from the personal use and availability of an automobile supplied by the employer is required to be included in calculating the employee's income under the Income Tax Act (the "Act"). The benefit includes a standby charge and an amount for the operating costs related to the employee's personal use of the automobile.
Paragraph 6(1)(e) and subsection 6(2) of the Act provide the calculation of the standby charge. The charge applies when an automobile, including a rented vehicle, is "made available" to the employee. The formula in subsection 6(2) of the Act, takes into account the employer's cost of each automobile, or the lease payments in the case of a leased automobile, and the total number of days throughout the year each automobile was made available to the employee. The standby charge for the personal use of a rented vehicle would be calculated the same way as a leased vehicle. In other words, the rental cost would be included in variable E of the formula described in subsection 6(2) of the Act. The operating cost benefit would be calculated under paragraph 6(1)(k) of the Act.
An automobile benefit worksheet, RC18E, is available on the Canada Revenue Agency website at www.cra-arc.gc.ca/E/pbg/tf/rc18.
We trust that these comments will be of assistance to you.
Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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