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: Requesting a change in rates due to rapidly increasing gas prices.
Position: Forward to the Department of Finance.
June 13, 2008
XXXXXXXXXX
Dear XXXXXXXXXX :
Thank you for your email received on April 27, 2008, concerning the prescribed automobile allowance rates for 2008.
The prescribed automobile allowance rates are set out in regulation 7306 of the Income Tax Regulations. The Department of Finance Canada reviews these prescribed rates annually and announces any changes before the end of the calendar year. This practice ensures that business owners are aware of the deductibility limits for automobile allowances paid to their employees before the beginning of the particular year in which they apply.
The automobile allowance an employee receives for using his or her own automobile for employment purposes will result in a taxable benefit unless the allowance is determined on a reasonable per-kilometre basis. Whether an allowance is reasonable in any particular situation is a question of fact. Although the prescribed rates are not mandated for employee benefits arising from automobile allowances, the Canada Revenue Agency will not question the reasonableness of an allowance based on the prescribed rates.
You suggest that the rates should be increased to alleviate the financial burden of rapidly increasing gas prices. I am therefore forwarding a copy of your correspondence to the Honourable James M. Flaherty, Minister of Finance, for his consideration.
I trust that the information provided and the referral will be helpful.
Sincerely,
The Honourable Gordon O'Connor, P.C., M.P.
c.c.: The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6
Michael Cooke
(613) 446-0484
2008-027661
May 5, 2008
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