9 June 1994 External T.I. 9406705 - AUTOMOBILE OPERATING 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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		940670
XXXXXXXXXX	J.A. Szeszycki

Attention: XXXXXXXXXX

June 9, 1994

Dear Sirs:

Re: Taxable Benefits for Automobiles

This is in reply to your letter of March 4, 1994, and further to our meeting on March 17 and our recent telephone conversation (Szeszycki/XXXXXXXXXX), in which you requested a review of the XXXXXXXXXX dealing with the above-noted subject.

In our meeting we clarified that the calculation of the benefit as 12¢ per personal kilometre, provided in new paragraph 6(1)(k) of the Income Tax Act (the Act), contained in Bill C-27 and recently passed by the House of Commons, is applicable not only to those situations where the company provided vehicle is used less than 50% for business purposes but also where it is used more than 50% and the employee has not elected to use the alternative computation of 1/2 of the standby charge. We further clarified that the operating costs referred to in the later statement (in bold type) are to those not in connection with the office or employment.

The reference to the Act above is a reference to the Income Tax Act 1970-71-72, c.63 as amended, consolidated to June 10, 1993.

You indicated at the time of our meeting that a further enquiry would be forwarded to us regarding the treatment of insurance costs relating to a fleet of cars used by automobile dealers. Since the additional enquiry

has not been received as of this date and it is unclear as to whether you wish to pursue the enquiry, we have opted to confirm our previous conversations and close our file on the original enquiry. Should you wish to pursue the other matter at a later date please feel free to contact us.

We hope that we have been of some assistance to you.

Yours truly,

P. D. Fuoco
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch