12 December 1990 External T.I. 902895 F - Employee's Automobile Allowances

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.

19(1)

December 12, 1990

Dear Sirs:

Re:  Employee's Automobile Allowances

This is in reply to your letter of October 12, 1990 in which you requested clarification of Revenue Canada's plans to administer certain aspects of the "automobile rules" as proposed to be amended by he Department of Finance in its draft Technical Bill released earlier his year.

Since most of the questions in your letter involve matters of administrative policy and practice, we have referred your letter to Taxation Programs Branch for response. We understand that Assessing and Enquiries Directorate has already responded to questions 4 and 5 in your letter. A response by Collections and Accounting Directorate questions 1 to 3 will provided as soon as possible.

With respect to the question of a "reasonable" allowance under the proposed amendments, it is our tentative view that such questions will be determined on a case by case basis, taking into consideration each employee's circumstances.

Accordingly, the Department will accept the view that an employee's automobile allowance is not "reasonable" where an employee's total expenses for business use in a year exceed the total allowances received in that year. In such cases, the employee may, under proposed subparagraph 6(1)(b)(vii.1), include the allowance in income and claim related business expense to the extent they are reasonable.

Subsection 8(10) (as amended) will continue to require prescribed form (T2200) to be signed by the employer certifying the conditions of employment.

If you have any further questions on this matter, please do not hesitate to contact us.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch

c.c.     Mr. W.S. Hume DirectorExamination Division

     Mr. P. RemillardDirectorSource Deductions Division