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.
Principal Issues:
The issue concerns whether certain trips in respect of an employee are of a personal or business nature.
Position TAKEN:
Some of the trips are of a business nature and some of the trips are of a personal nature.
Reasons FOR POSITION TAKEN:
The comments provided are consistent with positions previously taken.
950189
XXXXXXXXXX M. Eisner
August 15, 1995
Dear Sir:
Re: Personal Use of Vehicle
This is in reply to your letter of January 23, 1995 in which you requested our views on whether certain travel is of a personal nature in connection with the determination of vehicle benefits. We apologize for the delay in replying.
As the determination of the tax consequences of an actual situation falls within the responsibility of your local tax services office, you may wish to contact Ms. B. McKernan (Source Deductions - 604-691-4422) of the Vancouver Tax Services office. We are, however, providing you with the following general comments.
An employee who is provided with a vehicle by his employer will be considered to have received a taxable benefit where his or her employer provides him or her with a vehicle that is used for personal travel. Where the vehicle is an automobile (this term is defined in the Income Tax Act), we refer you to the enclosed copy of chapter 1 which is a part of the Department's pamphlet entitled "Employer's Guide to Payroll Deductions". As indicated in the chapter, the personal use benefit in respect of an automobile consists of an operating benefit and a standby charge. On the other hand, if the vehicle provided to an employee is other than an automobile, we refer you to paragraph 13 of Interpretation Bulletin IT-63R4 which has been enclosed. We would also note that while this bulletin includes comments on the determination of automobile benefits, it does not, as indicated on page 1, take into account certain legislative changes.
One of the factors used in calculating a standby charge is the number of days that the vehicle is available to the employee. In relation to this factor, some employers set out the guideline to the effect that although an automobile is assigned to an employee, he or she is prohibited from using it for other than the employer's business. However, in spite of such a guideline, personal travel for income tax purposes is considered to be involved if the employee is entitled to use the automobile to travel to and from his regular place of work. There might also be some other trips that are considered to be of a personal nature for income tax purposes because the employer's concept of personal use does not coincide with personal use travel for income tax purposes. However, as indicated on page of 1-2, a standby charge can be reduced if the automobile is used at least 90% of the time for business purposes and the total kilometres for personal use are less than 12,000 a year. As an example, an employee who is provided with an automobile which is available for use for the entire year who travelled a total of 42,000 kilometres of which 4,000 is the personal use portion and 38,000 is the business use portion. Since the 90% test is met (the business use exceeds 90% of the total distance travelled), the percentage used in calculating the standby charge would be reduced from 24% (i.e., 2% per month) to 8% (4000 kilometres/12000 kilometres x 24%).
As previously mentioned, it is the Department's position that travel between an employee's residence and his or her regular place of work is personal. This is a longstanding position of this Department that has been supported by the Courts. An individual's regular place of work is considered to be the place where the individual reports for work. A warehouse or the employer's office are examples of such places. However, in some cases, the circumstances of an individual may be such that the individual is not required to report to a particular place on a daily basis and the times that the individual reports to a particular place involves a degree of discretion on the part of the individual. Nonetheless, where the individual is provided with a work location where, in connection with his or her employment duties, reports are filed, instructions or employment information is received, or other employment duties are involved, and the employee reports to the location on a basis such as every second or third day or every week or so, that work location is considered to be the employee's regular place of work.
On the other hand, if an individual's employer requires the individual to have an office in the home and that is essentially where the individual's employment duties are based, then that office would become the individual's regular place of work with the result that travel from his or her residence to another location in connection with his or her employment duties would be business related rather than personal. However, as it appears that the circumstances of your situation do not involve such an office, the following comments are based on the assumption that the employee's place of work is the employer's premises.
As indicated above, an individual may have a degree of discretion with respect to the performance of his or her employment duties. However, notwithstanding such a circumstance, it is our view that where such an individual travels from his residence to his regular place of work in a vehicle provided by his employer to (a) file a report, (b) transport employment related items thereto, or (c) pick up an assistant, the travel is of a personal nature. This result occurs because the travel is between the employee's personal residence and the regular work location (i.e, the travel is not considered to have been undertaken in the course of employment). Similarly, it is our view that travel from the regular place of work back to the individual's residence is of a personal nature even though the individual was at the work location for the purposes of arranging for himself or herself an employer related trip out of town for the following day.
On the other hand, if an individual travels from his or her residence to a location for the purpose of carrying out employment related duties and then proceeds to the regular place of work, it is the Department's position that this travel is of a business nature. It is also our view that travel from (a) the individual's residence to a location to perform employment duties (e.g. a business appointment or meeting) and the return trip back to the residence, and (b) the regular place of employment to a location in connection with employment duties and then to the individual's residence, is of a business nature.
As a final comment, we would like to mention that as indicated on pages 1-5 and 1-8 (the Optional calculation), a reduced operating benefit in respect of an automobile may be calculated in certain circumstances.
While we regret that we could not provide you with a definitive reply, we trust our comments will be of assistance to you.
Yours truly,
P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
cc: Ms. B. McKernan
Source Deductions
Vancouver Tax Services
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