7 January 1991 Income Tax Severed Letter - Standby Charge Calculation - Mobile Phone Monitoring Activity During Employee's Travel Between Home and Work

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.

Dear Sirs:

Re: XXX Request for Advance Income Tax Ruling

We are responding to your letters of June 15 and October 31, 1990 concerning a request for an advance income tax ruling on behalf of the above taxpayer. As discussed with you by telephone, since your request does not involve a proposed transaction but instead relates to a series of ongoing circumstances, we are unable to provide you with a binding advance ruling. We are, however, prepared to offer some general comments regarding the situation described in your letters.

As we understand it, an employee of a company that manufactures and sells cellular telephones is provided with a company automobile equipped with a cellular telephone and a “Real Time System Analysis Tool”. He is required to monitor network performance, by means of this testing device, at all times, while in the company provided vehicle. The vehicle is used by the employee primarily in travelling between home and work during which time the monitoring activities are conducted. In travelling between home and work, he often uses alternative routes in order to monitor network performance under varying conditions.

You have asked whether the mobile phone monitoring activity during the employee's travel between home and work would be regarded as part of the individual's duties of employment with the result that the distance driven while engaged in this monitoring activity would be considered to be employment-related kilometres driven for the purposes of the standby charge calculation.

Our Comments

The Department's position on what is considered to be personal use of a motor vehicle supplied by an employer is set out in Interpretation Bulletin IT-63R3. As stated in paragraph 5 of this bulletin, in addition to what would obviously be considered personal use of a motor vehicle supplied by an employer, the Department considers personal use to include travel between an employee's place of work and home.

In our view, this statement applies regardless of whether an employee is engaged in employment-related telephone calls on a mobile telephone during personal trips and regardless of whether such calls are monitored by a testing device, such as “Real Time System Analysis Tool”. Thus, in the above situation, we would not agree that travel between the employee's home and work would be employment-related.

The question of whether a particular trip (or part thereof) is personal or employment-related is one of fact that can only be resolved on a case by case basis. If, at the request of an employer, an employee drives out of his or her way during a personal trip, solely for the purpose of testing and recording the technical capabilities of a particular type of cellular telephone or of a network in a location that is new or that is experiencing some technical problems due to weather conditions, etc., we would agree that the extra kilometres driven would be employment-related.

We trust the foregoing clarifies the Department's position in this matter. The deposit which accompanied your request will be returned to you under separate cover.