21 December 1998 External T.I. 9830345 - AUTOMOBILE BENEFITS - DIFFERENT SCENARIOS

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: Whether use of employer's car is a taxable benefit in three different scenarios: (1) The employee uses the car to travel home the day before an all-day conference. The employee then uses the car to travel to the conference. The following day the employee returns the employer's car to his or her work location. (ii) The employee uses his or her own car to travel from home to an employer's facility, switches to an employer's vehicle, and continues on to a second facility. At the end of the day, the employee reverses the trip. There is no purpose for driving to the first facility other than to switch vehicles. (iii) The employee uses an employer's vehicle to travel from his home to a temporary work site, for example, to participate in surveillance activities. Instead of picking up the employer's vehicle in the morning, the employee takes the employer' vehicle home the night before.

Position: (i) Likely no benefit. (ii) Likely a benefit. (iii) Likely a benefit.

Reasons: (i) Although travel to and from an employee's work location is personal, in the case where such an occurrence is infrequent and irregular, there is likely no benefit. (ii) Since the first facility cannot be regarded as a work location (because no work is performed there by the employee) the trip between the first facility and the employee' work location would be regarded as personal since it is merely part of the trip between the employee's home and his or her work location. (iii) Travel between home and work is considered personal. However, per para. 5 of IT-63R5, travel from home to a point of call will be considered employment-related.

Revenue Canada
Central Distribution Centre
5700 Keaton Centre
Mississauga, Ontario J. Gibbons
L5R 3H5 5-983034

Attention: Chris Burt

December 21, 1998

Dear Mr. Burt:

We are replying to your facsimile of November 19, 1998, in which you requested our views concerning the determination of employee taxable benefits for employer-provided vehicles. In our telephone conversation, you explained that the use of government vehicles by employees is very restricted. Basically, the use of a government vehicle by an employee is restricted to travel between home and the employee's work location or another job site. In your letter, you present three different scenarios, which, as discussed in our telephone conversation (Gibbons\Ilasewich), can be described as follows:

Scenario 1

The night before an employee is to attend an all-day conference away from the office, the employee uses a government vehicle to travel home. The employee then uses this vehicle to travel to and from the conference. The following day the employee returns the government vehicle to his or her work location.

Scenario 2

The employee uses his or her own car to travel to a government facility ("first facility") near his or her home, switches to a government vehicle, and continues on to another work location (the "second facility") where he or she is on a work assignment. At the end of the day, the employee reverses the trip. There is no purpose for driving to the first facility other than to switch to the government vehicle for travel to the second facility.

Scenario 3

The employee uses a government vehicle to travel from his home to a temporary job site, for example, to participate in surveillance activities. Instead of picking up the government vehicle in the morning, the employee takes the government vehicle home the night before.

Our Comments

If the vehicle being used is an "automobile," as defined in subsection 248(1) of the Income Tax Act, the value of the employee benefit consists of a standby charge and an operating expense benefit pursuant to paragraphs 6(1)(e) and 6(1)(k) of the Act respectively. Even if a motor vehicle is not included in the definition of automobile, a taxable benefit may arise under the general provisions of paragraph 6(1)(a). For the purposes of our comments below, it is presumed that the vehicle used by the employee is an automobile, as defined by the Act. We are enclosing Interpretation Bulletin IT-63R5, "Benefits, Including Standby Charge for an Automobile, from the Personal Use of A Motor Vehicle Supplied by an Employer - after 1992," which fully explains the calculation of automobile benefits for employees.

You will note from paragraph 5 of IT-63R5 that personal use includes travel between the employee's place of work and home. It also states that: "An exception 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 reports regularly (e.g., to make repairs at customers' premises), or returns home from such a point. These particular trips are not considered to be of a personal nature."

Scenario 1

Travel between the office and home before and after the conference would ordinarily be considered personal. However, where an employee is only infrequently and irregularly provided with a vehicle by an employer for the sole purpose of specified business travel, such as to meet with an out-of-town client or attend a training course or conference, there would likely be no benefit included in that employee's income as a result of having taken that vehicle home on the day before the specified business travel and returning it the first morning following the day which concludes business travel.

Scenario 2

In this case, the first facility cannot be regarded as a work location of the employee since no work is done there by the employee. It is simply a pick-up and drop-off point for the government vehicle. Accordingly, the trip between the first facility and the employee's work location would be regarded as personal since it is merely part of the trip between an employee's home and his or her work location. If the employee were required to report to the first facility to receive instructions or work assignments before proceeding to the second facility, then it is likely that the trip to the second facility would be considered employment-related. This principle is explained in paragraph 49 of IT-522R, "Vehicle, Travel and Sales Expenses of Employees."

Scenario 3

As discussed in scenario 1, the fact that the employee must travel from home to a job site for employment purposes first thing in the morning does not, in and of itself, make the trip home the evening before or the trip back to the office following his or her engagement at the temporary job site employment-related. However, since the use of the government vehicle is very restricted and the employee is required to take the vehicle home (or has the employer's permission to do so), it is likely that travel from home to a point of call (other than the employer's place of business where the employee regularly works) to carry out surveillance activities (as well as the return trip home from such a point), would be considered employment-related. In our view, this would probably fit within the exception described in paragraph 5 of IT-63R5, noted above.

We trust that these comments will be of assistance.

Yours truly,

J.F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate

Enclosure

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