7 September 2012 Internal T.I. 2012-0434341I7 - Taxable benefit chauffeur of employer-provided car

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 there a taxable benefit to the driver of an executive's employer-provided automobile, in various situations where the driver takes the car home at night?

Position: Question of fact

Reasons: Where the time and location of the first pick-up and last drop-off varies daily, a car would not be considered to have been made available to the driver and no taxable benefit would exist. However, if the driver picked up the executive at his residence every morning and returned there in the evening, proceeding home with the employer-provided automobile, then the executive's residence would be considered to be a regular place of employment to the driver. Any travel between the driver's home and the executive's residence would be personal and a taxable benefit would accrue to the driver.

September 7, 2012

XXXXXXXXXX Income Tax Rulings Directorate
Reorganizations Division
Bonnie Ruttan-Morillo
Attention: XXXXXXXXXX
2012-043434

Taxable Benefits resulting from use of an employer-provided automobile

This is in reply to your email dated January 24, 2012, enquiring if a taxable benefit would accrue to the driver of an executive’s employer-provided automobile in certain situations.

Generally, where an employer provides an employee with an automobile, any personal use of that automobile will result in a taxable benefit to the employee. A reasonable standby charge is included in the employee’s income under paragraph 6(1)(e) of the Income Tax Act (the Act) as well as an operating expense benefit under paragraph 6(1)(k) of the Act, to account for any employer-paid operating costs. It is the long-standing position of the Canada Revenue Agency (CRA) that travel between employees’ homes and their regular place of employment (RPE) is personal travel. This means that the use of an employer-provided automobile in respect of such travel gives rise to a taxable benefit.

As noted in Chapter 3 of Guide T4130, Employer's Guide: Taxable Benefits, any location at or from which an employee regularly reports for work or performs the duties of employment is generally considered a RPE. The exception is where an employee, such as a salesperson or repairman visiting customers, proceeds to a point of call (i.e., a work-related location other than his or her RPE) in the morning or returns home from such a point at night. These particular trips are not considered to be personal travel.

Employees may also be required to take home an employer’s vehicle during periods when they are on-call. In these situations, a taxable benefit will arise for the personal use of the vehicle to travel between home and his or her RPE. As explained previously, there is an exception if the employee proceeds home from a point of call or leaves from home to go to a point of call in the morning.

Whether a particular location will be considered to be the RPE of an employee is a question of fact requiring a review of all the relevant facts of each case. A particular site at which an employee reports to work for an extended period of time will likely be considered a RPE for that employee. On the other hand, even though an employee may change locations 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. It is the CRA's view that an employee may have more than one RPE and, in fact, it is the nature of some employment situations that more than one location may be viewed as a RPE.

Where a driver picks up and drops off an executive at his or her residence on a regular basis, it is the CRA’s view that the executive’s residence is a RPE for the driver. Travel between the driver’s home and the executive’s residence would therefore be personal travel for the driver.
The executive’s residence will not be considered a point of call if the residence is the pick-up and drop-off point every day. However, if the driver only occasionally drives the executive to his or her residence, then the executive’s residence will not be a RPE for the driver providing there are various times and locations for the daily pick-up and drop-off of the executive.

Where the executive does not require to be driven a specific day and the driver has the car at his or her home and uses the car to report to work in the morning and go home after work, it is our view that the use of the car for travel between home and work would give rise to a taxable benefit under section 6 of the Act. As noted above, an employee may have more than one RPE and the office of the employer may also be considered a RPE for the driver. Accordingly, any travel between home and that location in an employer-provided vehicle would also be considered personal travel and give rise to a taxable benefit.

We trust our comments will be helpful to you.

Yours truly,

Nerill Thomas-Wilkinson
Manager
for Director
Reorganizations
Income Tax Rulings Directorate