7 November 1991 Income Tax Severed Letter - Benefits from the Personal Use of a Pick-up Truck Supplied by an Employer

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.

1991 BC TAX EXECUTIVES MEETING

QUESTION

8. (a) Would the Department please outline their assessing practices with respect to pick-up trucks which qualify as "automobiles" as defined in subsection 248(1) of the Income Tax Act (the "Act") and which are supplied by a corporation to mill and woodlands employees in the forest industry who spend a portion of their day travelling around various work and logging sites in addition to travelling to and from home?
• (b) What is the Department's position where such a truck is assigned to two employees jointly?
• (c) Would a truck described in (a) above that is carrying fire-fighting equipment be considered as being "used primarily for the transportation of goods or equipment in the course of a business" for purposes of subparagraph (b)(ii) of the definition of "automobile" in subsection 248(1) of the Act?

ANSWER

• 8. (a) The Department's position is stated in Interpretation Bulletin IT-63R3. In addition tow hat would obviously be considered personal use of a motor vehicle supplied by an employer, the Department considers personal use to include travel between the employee's place of work and home, even though the employee may have to return to work after regular duty hours. An exception to this view occurs where the employee proceeds directly from home to a point of call other than the employer's place of business to which the employee reports regularly (e.g., effecting repairs at customers' premises) or returns home from such a point. These particular trips are not considered to be of a personal nature.

Consequently, the employees who have been supplied with pick-up trucks which are used for travelling to and from home and their regular place of work would be required to include in their income an operating benefit and a reasonable standby charge under paragraphs 6(1)(a) and (e), respectively, in respect of their personal use of the pick-up trucks. The regular place of work of a mill or woodlands employee who travels to various work or logging sites would depend on the circumstances of each employee. Consideration would then be given to whether the paragraph 6(1)(a) benefit could be reduced under subsection 6(6) with respect to employment at special or remote work sites. In this regard, the comments in IT-91R3 would be relevant.

• (b) Both employees could be subject to an operating benefit and a reasonable standby charge under paragraphs 6(1)(a) and (e) provided that the truck was used for personal purposes by both employees. It should be noted that the standby charge not only arises from the availability of the truck for personal purposes but is also dependent, inter alia, on the number of days in the year during which it was so available to him.
• (c) Whether a truck is used primarily for the transportation of goods or equipment in the course of a business is a question of fact that can only be determined after examining all of the particular facts of the situation. We have not been provided with all of the facts necessary for this determination.

If there is any concern regarding the above in a particular fact situation, the Personal and General Section, Rulings Directorate would be pleased to examine the matter.