24 September 1999 Ministerial Letter 9920568 - AUTOMOBILE TAXABLE 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.

September 24, 1999

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your letter of May 28, 1999, addressed to his predecessor, the Honourable Herb Dhaliwal, concerning automobile stand-by charge benefits for members of your police force.

The value of the benefit derived by an employee from the personal use and availability of an automobile supplied by an employer is required to be included in calculating the employee's income. This value is an amount equal to a prescribed amount per kilometre for operating costs in connection with personal use and a reasonable standby charge, plus the equivalent to the Goods and Services Tax on the standby charge. In general, this standby charge is 2 per cent per month of the cost of the automobile or two-thirds of the lease costs calculated with reference to the number of days the automobile was available to the employee or to a person related to the employee. The standby charge may be reduced when the personal use is less than 1,000 kilometres a month and at least 90 per cent of the distance travelled by the automobile in the total days available is in connection with, or in the course of, the office or employment. Further, provided the automobile is used primarily in connection with, or in the course of, the office or employment, an amount equal to one-half of the standby charge benefit may be used as the amount of the operating costs benefit in lieu of the per kilometre calculation.

I understand that members of your police force are on call seven days a week, 24 hours a day. While members do not receive compensation for being on call, there is an expectation that members will be ready to attend an emergency call at any time. One recommendation you make to improve the response time of on call members is to provide them with employer-owned unmarked police automobiles to take home. As these automobiles will only be used for transportation to a crime scene and not for any other function, in your view, there should be no benefit to the members for the personal use and availability of the automobile.

The Department's longstanding view is that travel between home and the work place is personal in nature. In our view, an employee's requirement to be on call and have an automobile available at all times does not diminish the benefit received by the employee in being able to travel between home and the work place in an employer-provided vehicle. Regardless of the use, or the non-use, of the automobile, once it has been made available to the employee, that individual is still subject to the standby charge for each day the vehicle is made available to him or her. Accordingly, in our view, an automobile is available for use by an employee as long as he has access to, or control over, the vehicle.

The taxation of a benefit regarding the use of employer-provided automobiles by law enforcement and public safety personnel was the subject of an extensive study in 1989, and the position taken was reaffirmed in 1995. Based on the findings of the review, the Department was unable to provide on exemption from the rules applicable to all employees.

While I regret that my reply cannot be more favourable, I trust that it explains the Department's position.

Yours sincerely,

Bill McCloskey
Assistant Deputy Minister
Policy and Legislation Branch

David Shugar
957-2133
September 17, 1999

- 2 -