17 September 2001 External T.I. 2001-0080785 - VEHICLE ALLOWANCES & PARKING EXPENSES

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: Taxation of Parking Reimbursement and vehicle allowance for employees working at different job sites

Position: Question of fact. If sites are regular place of work and they travel there from their homes, then travel is personal and amounts would be taxable.

Reasons: Consistent with other opinions.

XXXXXXXXXX 					2001-008078
						Wayne Antle, CGA
September 17, 2001

Dear XXXXXXXXXX:

Re: Employer-Paid Vehicle and Parking Expenses

This is further to your letter of April 10, 2001 concerning the taxation of amounts paid to employees for vehicle allowances and the reimbursement of parking costs.

The situation described in your letter appears to relate to completed transactions. As noted in Information Circular 70-6R4 Advance Income Tax Rulings issued on January 29, 2001, confirmation of the tax consequences on completed transactions must be obtained from your local tax services office. However, we can provide the following general comments that may be relevant to your situation but they are not binding on the Canada Customs and Revenue Agency (the "CCRA"). In your correspondence, you asked us to consider the following facts:

The employees work in the display and exhibits industry and are responsible for setting up various trade shows in the XXXXXXXXXX area. They are covered by identical collective agreements with a number of display companies. Most of the workers are dispatched directly to the various job sites by the union. The others work full-time for a particular employer, and report to the employer's place of business before being sent to the job sites. The workers are reimbursed for any parking costs they incur while at these job sites. If they are required to travel to XXXXXXXXXX, they receive a vehicle allowance of $XXXXXXXXXX per kilometer (to a maximum of XXXXXXXXXX kilometers) for use of their personal automobiles. The employer includes these amounts in the workers' gross earnings on their T4 slips.

Our Comments

Generally, when an employer reimburses an employee for the cost of parking at or near the employer's place of business, the employee is considered to have received a taxable employment benefit. There is an exception where the parking costs are reimbursed for business purposes, and the employee is regularly required to use his or her vehicle to carry out employment-related duties. With respect to the vehicle allowance, reasonable per-kilometer motor vehicle allowances are not taxable if they are received by employees for travelling in the performance of their employment duties.

In order to determine the tax treatment of the parking reimbursement and motor vehicle allowance, it is necessary to establish whether the particular job site constitutes a work location to which an employee regularly reports. This can only be determined after reviewing all of the facts including the frequency to which a particular location is visited, and the degree of travelling required by the employee regardless of the destination. An employee may have more than one regular work place, and this place may change from time to time. It is our view that travel between an employee's home and his or her regular workplace is considered to be personal.

Where the employees are hired on a short-term basis to work at a particular site, it is likely that the site would be considered to be the employee's regular place of work. Accordingly, the reimbursement of parking costs would constitute a taxable employment benefit unless the employees were regularly required to use their vehicle in the performance of their duties. Similarly, the vehicle allowance would be taxable if the employees' regular workplace was the job site in Abbotsford, and the allowance was paid for travelling from their homes to the Abbotsford site.

However, if the workers are hired as full-time employees of a particular company, and are regularly required to report to the employer's warehouse before being dispatched to various sites, then travel between the warehouse and the sites would, likely, be considered employment-related. In this case, the reimbursement of parking costs at the various sites, and the vehicle allowance paid for travel between the employer's place of business and the XXXXXXXXXX site would not be taxable.

In order for employees to be able to claim motor vehicle expenses, they must be ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places, the expenses must be incurred for travelling in the course of the office or employment, and they must not have received a tax-free allowance for use of their motor vehicles. The claim must be supported by a T2200 form signed by their employer certifying that these conditions have been met. It is the employer's responsibility to determine if it is appropriate to sign this form.

If you wish to discuss your particular situation, you may call or visit the Trust Accounts Section of your local tax services office. We trust that our comments will be of assistance.

Yours truly

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch