9 December 2008 External T.I. 2007-0231311E5 - Employment Benefits - Vehicle

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:

Is the use of an employer-provided vehicle to travel between home and approximately XXXXXXXXXX Sites within a city by Employees considered personal in nature?

Position:

Question of fact but probably not.

Reasons:

It is our view that depending on the frequency of visits, the Sites would not constitute regular places of employment.

								2007 - 023131
XXXXXXXXXX 							Renee Sigouin
(613) 957-2128
December 9, 2008

Dear XXXXXXXXXX :

Re: Employment Benefits - Vehicle

We are writing in response to your email of April 13, 2007 wherein you requested our comments on whether the use of employer-provided vehicles to travel between home and various XXXXXXXXXX ("Sites") by employees (the "Employees") of XXXXXXXXXX (the "Employer") would constitute a taxable benefit for income tax purposes.

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 a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.

We understand that the Sites are the Employer's equipment offices where Employees complete various installations in order to supply services to customers. The vehicles used by the Employees are two-seater vans that are required to transport equipment and test gear. There are approximately XXXXXXXXXX Sites within the city. We also understand that Employees are not limited to working at a predetermined grouping of Sites, but rather may be dispatched to work at any one of XXXXXXXXXX Sites in the city in the performance of their duties. In addition to the Sites, the Employer also has regular office premises in the city. You have advised that the installations performed by the Employees at each Site vary. You have also advised that the duration of a typical installation is approximately one to three days.

We understand that you are presently considering an arrangement that would allow Employees to take the employer-provided vans home at the end of their workday. The Employer would then dispatch Employees to Sites from their homes the following morning such that Employees would be expected to be at their installation at the commencement of their shift.

Broadly speaking, an employee may use a vehicle provided by his or her employer for purposes other than the employer's business. This is considered personal use of the employer-provided vehicle and gives rise to a taxable benefit to the employee under section 6 of the Income Tax Act (the "Act"). Personal use includes driving a vehicle to conduct personal activities and travel between home and work (even if an employer insists that an employee drives a vehicle home). However, it is our position that an exception would occur where an employer requires an employee to proceed directly from home to a point of call other than the employer's place of business to which the employee reports regularly (e.g., such as a salesperson or repairman visiting customers) or to return home from such a point.

In cases where travel includes both a personal element and an employment element, we consider the primary purpose of a particular trip to determine whether it is personal or employment related. It is always a question of fact, and as such, the CRA has not established any specific guidelines or criteria in this regard.

Whether an employee regularly reports for work at a particular location is a question of fact requiring a review of all the relevant facts of each case. An employee who reports to work at a particular site for an extended period of time will likely be considered to regularly report to work at such location. On the other hand, even though an employee may change location on a frequent basis, it will also be relevant to consider whether such employee reports for work at a particular location more than once, and the frequency of such returns. In our view, an employee may have more than one regular place of employment and, in fact, it is the nature of some employment situations that more than one location may be viewed as a regular workplace.

In this case, it is our view that where the Employees are required to, and do in fact, report to as many as XXXXXXXXXX Sites within the city (i.e., being their Employer's places of business) and do not return to Sites with any frequency or regularity (i.e., an Employee's dispatch to a particular Site is essentially random in nature such that Employees may not return to certain Sites more than once a year), the Sites will not be considered regular places of employment of the Employees. Accordingly, an Employee's use of the employer-provided van to travel from their home to a Site would be considered business-related and would not give rise to a taxable benefit under section 6 of the Act.

It is recommended that adequate record keeping be maintained to evidence which Employees are dispatched to which Sites during the year. Should it become evident that certain Employees regularly report to specific Sites, they will likely be considered regular places of employment for these Employees such that the use of an employer-provided van to travel from home to these Sites will give rise to a taxable benefit for tax purposes.

We trust these comments will be of assistance.

Yours truly,

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch