To determine what benefit must be included in income, we must define what constitutes an automobile for income tax purposes because the benefits are computed differently if the vehicle is an automobile rather than another type of motor vehicle.

What is an automobile

An automobile is a motor vehicle that is designed or adapted mainly to carry individuals on highways and streets, and has a seating capacity of not more than the driver and eight passengers.

An automobile does not include:

• an ambulance
• clearly marked police or fire emergency response vehicles
• clearly marked emergency medical response vehicles that you use to carry emergency medical equipment and one or more emergency medical attendants or paramedics
• a motor vehicle you bought to use primarily (more than 50% of the distance driven) as a taxi, a bus used in a business of transporting passengers, or a hearse in a funeral business
• a motor vehicle you bought to sell, rent, or lease in a motor vehicle sales, rental, or leasing business, except for benefits arising from personal use of an automobile
• a motor vehicle (other than a hearse) you bought to use in a funeral business to transport passengers, except for benefits arising from personal use of an automobile
• a van, pickup truck, or similar vehicle that meets either of the following criteria:
  • can seat no more than the driver and two passengers, and in the year it is acquired or leased is used (50% or more of the distance driven) to transport goods or equipment in the course of business
  • in the year it is acquired or leased, it is used (90% or more of the distance driven) to transport goods, equipment, or passengers in the course of business

or

• pickup trucks that you bought or leased in the tax year that meet both of the following criteria:
  • are used (50% or more of the distance driven) to transport goods, equipment, or passengers in the course of earning or producing income
  • are used at a remote work location or at a special work site that is at least 30 kilometres away from any community having a population of at least 40,000

Emergency Response Vehicles (ERV)

Police and fire vehicles

Paragraph (b.1.) of the definition of "automobile" in subsection 248(1) of the Income Tax Act excludes from the definition a clearly marked emergency-response vehicle that is used in connection with or in the course of an individual's office or employment with a fire department or the police.

Unmarked ERVs such as ghost cars are not excluded from the definition because they are not clearly marked on the exterior. In general, radios, computers and lights on the inside of a vehicle, regardless of the fact that it may carry special equipment, be identified with city decals or be required to respond to emergency situation does not bring the motor vehicle into the exception in paragraph (b.1) of the definition of "automobile" in subsection 248(1) of the Income Tax Act.

Ambulances

Paragraph (b) of the definition of "automobile" in subsection 248(1) of the Income Tax Act also excludes from the definition of "automobile" an "ambulance".

The term ambulance is not defined in the Income Tax Act. However, in the past CRA has referred to the applicable provincial Ambulance Act in order to determine whether or not a vehicle is excluded from the definition of an automobile because it is an ambulance. For example, the Ambulance Act of Ontario defines an ambulance as a vehicle used or intended to be used in the transportation of persons who meets either of the following criteria:

• have suffered a trauma or an acute onset of illness either of which could endanger their life, limb or function
• have been judged by a physician or a health care provider designated by a physician to be in an unstable medical condition and to require, while being transported, the care of a physician, nurse, other health care provider, emergency medical attendant or paramedic, and the use of a stretcher

In addition, to being used to transport patients, the Ambulance Act of Ontario authorizes the Minister of Health to prescribe standards for ambulances. The Ontario Provincial Land & Emergency Response Vehicle Standard clearly states that an ambulance must meet very specific requirements. For example, an ambulance must be clearly marked as an ambulance and must meet minimum standards for equipment in the patient area.

Whether or not the ERVs are "ambulances" is a question of fact. In general, unless the vehicles meet the requirements and standards in the applicable provincial legislation governing ambulances, they would not be considered to be "ambulances" for income tax purposes and would not fall under the exception in paragraph (b.1) of the Income Tax Act.

Since January 1, 2005, clearly marked emergency medical response vehicles that are used to carry emergency medical equipment and one or more emergency medical attendants or paramedics has been excluded from the definition of an automobile.

Employees who use vehicles that are exempted from the definition of an automobile will not be subject to the standby charge and operating expense benefit inclusions. Rather, the employee will be required to include in income a reasonable amount in respect of the personal use of such vehicles. For more information, see How to calculate the benefit for employer provided automobiles and other vehicles.