13 July 2001 Internal T.I. 2001-0084087 - EMPLOYER PROVIDED PARKING 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.

Principal Issues:

What is the CCRA's policy when an employer provides parking to an employee?

Position:

Employer provided parking is a taxable benefit to employees unless the employee is regularly required to use his or her vehicle for business reasons.

Reasons:

Paragraph 6(1)(a) of the Income Tax Act; Employers Guide: Taxable Benefits 2000-2001.

		July 13, 2001

	Toronto Centre Tax Services Office 	HEADQUARTERS
	Verification & Enforcement Division	Randy Hewlett, B.Comm.
	Gulshan Rahim	613-957-8973

		2001-008408

Employer Provided Parking Benefits
XXXXXXXXXX

We are writing in response to your facsimile dated May 14, 2001, wherein you requested our opinion on employer-provided parking. You requested clarification on the tax implications to an employee for employer provided parking specifically where an employee is required to have his or her vehicle available, but has no control over when use may be required for business purposes. In addition, you request our interpretation of "regularly required for business purposes" XXXXXXXXXX.

Paragraph 6(1)(a) of the Income Tax Act (the Act) requires the inclusion in income of any benefit received or enjoyed by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment. Generally, the fair market value of an employer-provided parking space, minus any amount paid by the employee for use of the parking space, is a taxable employment benefit under paragraph 6(1)(a) of the Act. This is set out in paragraph 2.17 of the Employers Guide: Taxable Benefits 2000-2001 (Employer's Guide).

As detailed in the Employer's Guide, employer-provided parking constitutes a taxable benefit to the employee regardless of whether the employer owns the parking lot. Further, no taxable benefit exists when the employer provides a free parking space for business reasons, and the employee regularly has to use his or her vehicle to carry out the duties of employment. As well, if the fair market value cannot be determined, no benefit is applicable to the employee. This could be the case, for example, where a business operates from a shopping center or industrial park and parking is available to both employees and non-employees.

The determination of whether an employee regularly has to use his or her vehicle can only be made after reviewing all of the facts. Examples of factors that may have an impact include the number of days in which the vehicle is required to be used for employment purposes throughout the year, the nature of the employment contract and whether the employee or employer is the major beneficiary of the space being made available to the employee. One single factor should not be taken in isolation to make a determination of whether an employee regularly has to use his or her vehicle for employment purposes. As noted, there is no taxable benefit to the employee when it is established that there is regular business use.

Where it is determined that there is only incidental use for the employer's business and there is employer-provided parking, a reduction in the parking benefit otherwise included in income under paragraph 6(1)(a) of the Act would be appropriate. The reduction should be made on some reasonable basis to account for the incidental business use. For example, the benefit otherwise determined could be reduced on the basis of the number of days used in the employer's business in the calendar year.

XXXXXXXXXX However, the Employer's Guide sets out our position on the taxation of benefits related to employer-provided parking to ensure consistency in our self-assessment system.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Canada Customs and Revenue Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Mrs. Jackie Page at (613) 957-0682. A copy will be sent to you for delivery to the client.

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