5 November 1992 Income Tax Severed Letter 9222635 - Leased Vehicles and Taxable Benefits

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.

A.W. Larochelle
        24(1)                                  (613) 952-1361

Attention: 19(1)

November 5, 1992

Dear Sirs:

Re: Company Leased Vehicles and Taxable Benefits This is in reply to your letter of July 23, 1992 in which you requested our assistance in arriving at the proper amount of taxable benefit to be reported by certain of your employees under paragraphs 6(1)(a) and 6(1)(e) of the Income Tax Act (the "Act") as an operating cost benefit and a reasonable standby charge for the use of the employer's automobiles, taking into consideration the undernoted factors. We apologize for the delay in replying. We also wish to acknowledge our telephone conversation on September 18, 1992 (Larochelle/19(1)) in which you clarified the circumstances of your case.

The pertinent facts related to your enquiry, as set out in your letter, are as follows:

                      24(1)

                              24(1)

You also mentioned that the purpose of your enquiry was to clarify whether the required travelling could be viewed as being for business purposes. If so, the business use would automatically be 90% or more of the kilometres driven and the personal use of a car in most instances would amount to less than 12,000 kilometres in the year, permitting you to report the standby charge and the benefit in respect of the operating costs of the vehicles on a reduced basis, as provided for in the Act.

Based on the above circumstances you have asked us to confirm your views that:

-        any travel from the employee's home to a branch
         other than that person's base office should be
         considered to be for business purposes, even if the
         distance is less than the distance to their base
         office.  The same would be the case for a trip from
         a branch to their home;

-        travel from one branch to another would also be
         considered to be for business purposes, as would
         travel between the employee's base office and a
         branch;

-        travel from the employee's home to the base office
         would be considered to be personal, and the same
         treatment would be given to travel from the
         employee's base office to home.
Our Comments 

While we are basically in agreement with your conclusions on the questions raised we would caution at the outset that in applying these interpretations to each individual case all of the factors would have to be reviewed before a determination can be made as to the value of the benefit to be reported for a specific individual. However, based on the information provided in your letter and subsequent correspondence, we can offer the following general comments:

1. You have raised a number of issues concerning whether certain travel is of a business or personal nature and in this regard we would refer you to paragraph 5 of IT-63R3 which states the Department's position that personal use of an automobile includes travel between the employer's place of work and home. An exception to this rule occurs, however, where (as required by the employer or with the employer's permission) the employee proceeds directly from home to a point of call other than the employer's place of business to which the employee regularly reports, or returns home from such a point. These particular trips are not considered to be of a personal nature.

2. Whether an employee's place of work is to be considered a "regular place of work" is a question of fact that can only be determined on a case by case basis upon a review of all the individual's circumstances. You have indicated that the employees in your example may be required to work at the various branches for short periods (for example, a few days) and if this is the situation we would agree that travel from the employees home and return from that location would most likely be viewed as business travel. However, if the individual's stay at the branch extends into longer periods, possibly months, then depending on the circumstances that particular location may be viewed as the employee's regular place of work. In such an event the travel between that place of work and home would be viewed as personal travel.

In closing we would like to re-emphasize that each case should be looked at individually in arriving at the total of the two types of automobile benefits described in the Act. The Department's general position on the calculation of these benefits is described in detail in IT-63R3 . Please note that the bulletin also includes in its discussions references to the various other provisions of the Act that are relevant in computing vehicle benefits, as well as the Department's long-standing position that travel between an employee's settled place of work and the employee's residence is personal in nature.

If you require further assistance with respect to any particular case, you may wish to contact the Chief of the Source Deductions Section at the District Taxation Office where your company files its tax returns.

We hope that the foregoing comments will be of assistance to you.

Yours truly,

J.A. Szeszycki for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch

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