18 December 1989 Internal T.I. 32789 F - Reasonable Standby Charge for Use of Automobile

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.

Dear Sirs:

Re:  Request for an Advance Income Tax Ruling 19(1)

This is in response to your letter of October 28, 1989, in which you requested an advance income tax ruling in respect 24(1)  24(1) Thank you for taking the time to make your representations to us in person on November 24, 1989.

24(1)

You have asked five questions in respect of the requested ruling:

1.     Is the expression in paragraph 6(2)(d) of the Income Tax Act (the "Act"), 'in connection with or in the course of the office or employment', restricted to merely the action of driving from one business location to a second business location and from a personal residence to a business location other than the usual place of work?

2.     Does the activity of engaging in telephone conversations of a strictly employment nature constitute an activity that is 'in connection with or in the course of the office or employment' if such activity would otherwise have to be conducted sometime later at a stationary telephone location by the employee as a duty of his employment?

3.     If a telephone conversation of an employment nature does constitute an activity that is 'in connection with or in the course of the office or employment', then, can the travel between a personal residence and the usual work location be considered not to be of a personal nature if such telephone conversations are being conducted during that period of travel?

4.     Can the measurement of the expression in paragraph 6(2)(d) of the Act 'distance travelled by the automobile in the total available days' be measured based on time spent engaging in telephone conversations of an employment nature relative to the total time spent in the travel between a personal residence and the usual work establishment?

5.     If the measurement of the expression 'distance travelled by the automobile in the total available days' can be based on the time expiration approach as stated in 4 above, does the 90% rule as defined in IT-63R3 in respect of the expression 'all or substantially all' pursuant to paragraph 6(2)(d) of the Act apply to this approach and to the travel between a personal residence and the usual work establishment?

As stated in paragraph 14 of Information Circular 70-6R "Advance Income Tax Rulings" (copy of which is attached) we are unable to provide a ruling in a situation where the determination requested is primarily one of fact, and the circumstances are such that all the pertinent facts cannot be established at the time of the request.  We would however, like to offer the following comments on the issues you have raised.

1.     The phrase "in connection with or in the course of the office or employment", as used in paragraph (d) of the calculation of "A" of the formula contained in subsection 6(2) of the Act, refers to the distance travelled by the automobile.  Paragraph 5 of IT-63R3 outlines the Department's position on what type of travel is considered personal.  Distance travelled which is not personal in nature (in relation to the employer's business) is considered to be in connection with or in the course of employment; other distance travelled is not.

2&3.     While the activity of engaging in an employment-related telephone call on a mobile phone may constitute an activity that is in connection with employment, it does not follow that the distance travelled by the automobile while the driver is so engaged is also in connection with or in the course of employment.

4&5.     Based on our response to question 3, responses to questions 4 and 5 would not appear to be required.

In summary, it is our position that personal travel as described in paragraph 5 of IT-63R3 cannot be converted to travel 'in connection with or in the course of employment' by the concurrent use of a mobile phone for employment purposes.

We trust this will be of assistance to you.

Your deposit will be returned under separate cover.

Yours truly,

for Director Business and General Division Specialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch

Enclosure

c.c.     Montreal District OfficeShawinigan Taxation CentreAssessing and Enquiries DirectorateSource Deductions Division