Paragraph 6(1)(b) - Personal or living expenses


S. 6(1)(b) includes all amounts received by the taxpayer "as an allowance for personal or living expenses or as an allowance for any other purposes" in the taxpayer's income from an office or employment to the extent that such amounts are applicable to the office or employment. However, the amounts listed in ss. 6(1)(b)(i) to (ix) are not so included. Accordingly, in contrast to the reimbursement of an expense in circumstances where such reimbursement does not give rise to a taxable benefit under s. 6(1)(a), the full amount of an allowance received by an employee is included in the employee's income in the year of receipt, and the employee must then turn to s. 8 to determine whether any deductions can be claimed for expenses for which the allowance may have been intended to be compensation.

Amounts received by a taxpayer will be considered to be "allowances" if their amounts are fixed or determined in advance, they do not correspond to the actual amount of expenses incurred personally by the taxpayer, and the taxpayer has no obligation to account for the amounts received (Verdon, Bériault, Rio, Côté, MacDonald). However, a non-accountable allowance received by the taxpayer may not be taxable under s. 6(1)(b) if it is apparent that the personal expenses of the taxpayer for which the allowance is intended to be compensation are higher in amount than the allowance (Huffman).


Bériault v. Canada, 2004 DTC 6522, 2003 FCA 430

A lump sum of $65,120 that the taxpayer received from his employer as a result of his transfer from Montreal to Toronto was an allowance within the meaning of s. 6(1)(b) given that the amount did not correspond to the amount of the expenses or loss incurred by the taxpayer, and he had no obligation to account to his employer for his costs or actual expenses.

Rio v. Canada (Attorney General), 2004 DTC 6079, 2003 FCA 396

Payments to the taxpayer of a monthly accommodation allowance, a monthly cost of living allowance and a "monthly function" allowance while he was in Toronto constituted predetermined amounts that did not correspond to the actual amount of the expenses incurred by him and he could use the allowances as he chose. Accordingly, the allowances were required to be included in his income under s. 6(1)(b).

The Queen v. Côté, 99 DTC 5788, 1999 CanLII 8469 (FC) (FCTD)

The taxpayer, who was a senior Quebec civil servant, was taxable on a lump sum equal to four weeks' salary that compensated him for expenses of a compulsory move from Quebec City to Montreal given that the amount qualified as an allowance (i.e., a limited and predetermined amount that was paid to cover personal expenses in lieu of reimbursement and for which there was no obligation to account).

Words and Phrases

Verdon v. The Queen, 98 DTC 6175 (FCA)

The taxpayer received a meal allowance of $1,440 per year which was calculated and advanced, based on past experience, at $7 per meal, four days per week, and was intended to cover the cost of his having meals while he worked at an office away from his home. Linden J.A. found (at p. 6176) that the amounts were includible in income as allowances:

"(1) these amounts were an arbitrary or fixed amount, that was determined in advance ... .; (2) they were paid to cover personal expenses in lieu of reimbursements; and (3) there was no obligation to account for them."

With respect to the different treatment accorded to reimbursements and allowances, he stated (at p. 6176) that "this is felt to be necessary in order to ensure that allowable, reimbursed, personal expenses are accurately recorded ... ."

Attorney General of Canada v. MacDonald, 94 DTC 6262 (FCA)

A monthly housing subsidy of $700 that was payable to an RCMP member as a result of his relocation to Toronto was taxable under s. 6(1)(b) because it had all the legal characteristics of a taxable allowance. It was a limited, pre-determined, "round" amount, its purpose was to subsidize his accommodation costs and he received the amount totally in his discretion without any requirement to actually incur any accommodation expenses.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 76

Blanchard v. The Queen, 92 DTC 6585 (FCTD)

The taxpayer would not have accepted employment at Fort McMurray if his employer had not provided an arrangement under which a nominee of the employer ("Northward") sold a home to the taxpayer under a long-term agreement of purchase and sale. In finding that a payment made seven years later by Northward to the taxpayer in order to eliminate its contingent obligation to buy back the taxpayer's home was not an allowance for purposes of s. 6(1)(b), Jerome A.C.J. noted that the amounts were paid in satisfaction of a previous contractual obligation and were not intended for the taxpayer's personal gain or to underwrite personal extravagances; and were intended to reimburse him for the loss of rights.

Splane v. The Queen, 90 DTC 6442 (FCTD), briefly aff'd 92 DTC 6021 (FCA)

The taxpayer, who was asked by his employer to relocate from Ontario to Alberta, sold his home in Smith Falls for $65,000 and purchased a home near Edmonton for $63,000. In each of the subsequent three taxation years, the taxpayer was reimbursed by his employer for the difference between the mortgage interest (of 14.25%) paid by him in respect of his new home and the prior interest rate of 12.5% payable on the mortgage on his Smith Falls home. Because the payments in question were reimbursements made after the expenses were actually incurred by him due to the higher interest rates that were in effect at the time he moved, they did not constitute a taxable allowance.

The Queen v. Huffman, 90 DTC 6405 (FCA)

By virtue of the collective agreement between the Niagara Regional Police Force and the Niagara Police Association, each plainclothes officer (including the taxpayer) was entitled to be reimbursed by the Board for expenses in the purchase of clothing worn in carrying out duties of employment in an amount not exceeding $500 per annum. The Crown unsuccessfully submitted that the difference between the payment to the taxpayer of $500 and the total of the receipts submitted by him of $425.23 was an allowance pursuant to s. 6(1)(b).

The Court accepted that when the reimbursement amount had been increased from $400 to $500 pursuant to the 1979 collective agreement, an administrative decision had been taken that officers would not be required to submit receipts above $400, in order to avoid extra paperwork, and that the taxpayer had spent more than $500. Accordingly, no part of the reimbursement of $500 could be said to be an allowance.

See Also

Sénéchal v. The Queen, 2011 DTC 1357 [at 1997], 2011 TCC 365 (Informal Procedure)

The taxpayers were police union representatives. Although they continued to receive their regular remuneration from the police force, they could spend up to a specified number of hours on union duties (e.g., 1000 hours per year). They received funds from the police union for various expenses including transportation and meal expenses, and in some instances child care, internet and computer expenses and allowances for attending union meetings. These amounts were often paid in a fixed amount without receipts being required.

Lamarre J. affirmed the Minister's position that amounts received were taxable, generally as taxable allowances. Respecting amounts received from the union to compensate for home office expenses, he stated (at para. 37):

[T]hese expenses constitute personal expenses that the appellants would have incurred even if they did not have union duties. An employer's payment of an employee's regular or current expenses constitutes a taxable benefit. In reimbursing the appellants this way, under the pretext that they use their computers to carry out union tasks, the Police Union was giving the appellants a form of remuneration.

McLay v. MNR, 92 DTC 2260 (TCC)

A "transfer allowance", equal to one month's salary, which the taxpayer received from his employer pursuant to a general policy to pay such amounts on relocation to another city was a taxable allowance given that: its amount was predetermined as one month's salary and was not dependent upon or related to any particular expenses; it was intended to enable him to discharge certain unspecified kinds of moving expenses; and the amount was at his complete disposition.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 62 96

Administrative Policy

2 October 2014 External T.I. 2013-0491411E5 F - Allocation pour une automobile

compensation for providing car rides not received in course of employment

What is the tax treatment of amounts paid to taxpayers for using their cars in providing lifts for the organization? CRA stated (TaxInterpretations translation):

Services are rendered in the course of employment where there is an employer-employee relationship between the parties. In order to determine whether there is such a relationship, it is necessary in Quebec to take into account the principles of the Civil Code of Québec in analyzing the following three essential elements: performance of work, remuneration and a relationship of subordination between the parties. ...

In situations similar to the particular situation, where the services are not performed in the course of an employment or business, we are of the view that the amounts received do not have to be included in the computation of income of the taxpayer.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 3 compensation for car rides not received in the course of employment or a business 174

May 2016 Alberta CPA Roundtable, Q.3

regular places of employment re reimbursements/allowances for related travel

2013-0507421E5 indicated that if an individual has multiple regular places of employment (RPE) and travels between them during the day, the trip from the individual’s home to the first RPE and the trip home from the last RPE is personal, whereas travel between RPEs is considered employment-related. In this context, is a home office an RPE if work is performed there on a periodic basis (i.e. once or twice a month), and what are the common factors considered in determining if a work location is an RPE or a special work site? CRA responded:

Where an employee works at multiple locations, the regularity of the reporting and the nature of the duties carried on at this location is considered as well as the frequency. For example, if an area manager reports for work at three different stores throughout the year to carry out supervisory duties as required, each of these locations could be considered a regular place of employment. … a location may not be a RPE for an individual if, for example, the individual works at that particular location only once during the year or perhaps for only a few days in the year. …

The CRA’s general position is that travel between an employee’s home and their employer’s business location is personal, even when the employee has a home office that is a regular place of employment. …

CRA does not have a list of common factors used to determine if a work location is an RPE. …

[F]or a location to be considered a special work site…:

1. The duties performed by the employee at that location must have been of a temporary nature,

2. The employee maintained [and resided at] at another location a self-contained domestic establishment (SCDE)…to which by reason of distance, the employee could not reasonably be expected to have returned daily from the special worksite,

3. The employee’s duties required the employee to be at the special work site away from his or her principal place of residence for not less than 36 hours.

If an employee works at a special worksite for an extended period of time, it is our view that the special worksite will most likely be the employee’s regular place of employment. Accordingly, any allowance paid by the employer for the use of the employee’s vehicle for transportation between his or her temporary place of residence and the special worksite would be a taxable benefit under paragraph 6(1)(b).

S2-F3-C2 - Benefits and Allowances Received from Employment

Meaning of allowance

2.56 An allowance or an advance is any periodic or lump-sum payment that an employee receives without having to account for its use. An allowance or advance is:

  • usually an arbitrary amount that is predetermined without using the actual cost;
  • usually for a specific purpose; and
  • used as the employee chooses, since the employee does not provide receipts.
Words and Phrases

5 July 2015 External T.I. 2015-0588201E5 F - Apportez vos appareils personnels / BYOD

fixed BYOD allowance not verified against receipts is taxable allowance

CRA confirmed its view in 2014-0552731E5 that employees, who were required to use cell phones in the performance of their duties, received a taxable allowance when their employer paid them a fixed monthly amount (calibrated to each employee's duties) not in excess of their costs, given that the employer “did not require detailed receipts.”

7 April 2015 External T.I. 2014-0552731E5 F - Apportez vos appareils personnels / BYOD

monthly payments re employee cell phone costs were allowances given no detailed receipts required

Employees, who are required to use cell phones in the performance of their duties and to have their cell phone contracts approved by the employer, but bear the monthly costs of the contracts personally. However, the employer pays each a fixed amount based on the particular requirements of each employee not in excess of their costs. The employees do not systematically provide copies of their invoices, but are required to retain them for possible future inspection. CRA stated (TaxInterpretations translation):

Given that you do not require detailed receipts…the monthly payments to your employees for using their personal cell phones required in the performance of their employment do not constitute a reimbursement of expenses. …[T]he monthly payment constitutes an allowance. Consequently, the monthly payment must be included in computing the income of the employee… .

Words and Phrases

18 December 2014 External T.I. 2014-0523711E5 F - Allocation pour déménagement - achat de meubles

favourable policy on relocation allowances does not extend to costs of new goods

Mr. X who was employed abroad by Company Y, is relocated to work for Company X (an associated Canadian corporation) at a Canadian location. Company X wishes to provide him with relocation compensation that Mr. X could use to acquire new furniture and new supplies. The expenses associated with the relocation of the household articles of Mr. X would be greater than the amount of the compensation amount that would be paid to him. The compensation amount would have a fixed amount and would only be paid on presentation of supporting invoices by Mr X. Would this amount be taxable? CRA stated:

While generally a relocation allowance for which the recipient does not have to justify the use is taxable, [CRA] has an administrative position with respect to relocation allowances of an employee…. This CRA administrative position does not apply to expenses related to the purchase of new goods (such as furnishings, carpets, bedding and household items) or to improvements and repairs of household articles.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) allowance that is capped at documented expenses might not be an allowance/reimbursing new furniture might be taxable benefit 220

1 October 2014 External T.I. 2013-0476081E5 F - Allocation pour une automobile

NPO drivers not taxable on $0.42 per kilometer received for driving services

The only compensation received by taxpayers from a non-profit organization for transporting, using their own automobiles, people with reduced mobility so that they can make health-care appointments, is $0.42 per kilometer traveled. Is this taxable? CRA responded:

In situations similar to the given situation, where the services are not rendered in the course of an employment or business, we are of the view that the amounts received do not have to be included in the computation of income of the taxpayer.

14 February 2014 Internal T.I. 2013-0495661I7 - Taxability of payment from US charitable trust

financial assistance to former charity employee

Monthly allowances received by a former employee of a US charitable trust is not income to him given that they are "financial assistance is based on the individual's personal financial needs" so that "the amounts received from the Fund are likely received in the individual's personal capacity rather than by virtue of the individual's employment." However, "since the criteria of paragraph 56(1)(u) appear to have been met, the financial assistance should be included in the individual's net income under that paragraph and deducted under paragraph 110(1)(f)."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(u) financial assistance to former charity employee 86

1996 Ruling 963215 (C.T.O. "Options with SAR Rights")

Where an existing stock option plan is amended by permitting employees to request cash payment for the value of their stock options, s. 7(1)(b) will not apply where an employee requests cash payment and the employer chooses to settle this obligation by issuing shares having a fair market value equal to the economic value of the option.

29 June 1995 Memorandum 951114 (C.T.O. "Taxable Benefits and Allowances - Cleaning")

Following the decision in The Queen v. Huffman, 90 DTC 6405 (FCA), it is the Department's position "that a reasonable allowance in respect of dry cleaning and uniform maintenance would not constitute a taxable benefit to the extent that it is actually expended for that purpose."

26 July 1994 T.I. (C.T.O. "Employment Benefits - Special Clothing")

Although a non-accountable allowance for uniform dry cleaning and maintenance would not constitute a taxable benefit to the employee provided the allowance was reasonable and actually expended, a non-accountable personal grooming allowance would constitute a taxable benefit.

9 February 1994 T.I. 933587

"An employee would not be considered to be in receipt of a taxable benefit with respect to special or protective clothing (including safety footwear) which, by reason of the hazards inherent in the employment duties or by a law of a province or Canada, the employee is required to wear, where the employer provides the employee with a clothing allowance to the extent the allowance is expended on such special or protective clothing."

13 December 1993 T.I. 932633 (C.T.O. "Transfer Allowance")

A relocation allowance equal to 1/12 or 1/24 of one year's salary of a member of the RCMP will be taxable as remuneration from employment in light of McLay v. MNR, 92 DTC 2261 (TCC).

11 March 1993, T.I. (Tax Window, No. 30, p. 13, ¶2465)

RC generally accepts that a non-accountable allowance for overtime supper money that is less than or equal to the value or cost of a normal meal, where payment of the allowance is not governed by a collective agreement and the requirement to work overtime does not occur frequently, is a reimbursement on account of the cost of the meal and, therefore, it is not subject to tax in the employee's hands.

5 January 1993 T.I. (Tax Window, No. 28, p. 15, ¶2402)

Amounts received by employees pursuant to a Quebec regulation requiring construction contractors to pay a set amount per day to employees to cover the employees' cost of travelling between home and the work site are included in their income under s. 5(1), and are not allowances for travelling expenses within the meaning of s. 6(1)(b).

21 July 1992 Memorandum 921671 (March 1993 Access Letter, p. 64, ¶C5-184)

An allowance paid to employees paid by reference to their increased commuting distance resulting from an employer's relocation would be included in their income.

18 June 89 T.I. (Dec. 89 Access Letter, ¶1042)

Where the employers' practice was to provide a periodical lump sum payment for trips within a 16-kilometre radius from the employer's place of business, and to provide a reasonable allowance based on the distance travelled for trips outside this radius, the full amount of lump sum payment received with respect to travelling within the 16-kilometre radius was taxable under s. 6(1)(b).

Subparagraph 6(1)(b)(iii)

Administrative Policy

23 January 1992 Memorandum (Tax Window, No. 12, p. 9, ¶1571)

Foreign service employees of Canada who receive allowances in respect of vacation trips are not taxable on those allowances pursuant to s. 6(1)(b)(iii).

Subparagraph 6(1)(b)(v)


Hudema v. The Queen, 94 DTC 6287 (FCTD)

A taxpayer, who was employed in the selling of television advertising in Regina and the surrounding viewer area, received a weekly car allowance of $44 per week and was reimbursed for actual gas, oil, lubrication and parking expenses. His personal use of his car (which was the family's second car) ranged from 35% to 4% in the taxation years in question. In finding that the allowance was a reasonable allowance (with the result that the taxpayer was not entitled to claim any additional deductions under s. 8(1)(f) or (h)), Strayer J. stated (p. 6290):

"He did not demonstrate that it was sensible to make such little personal use of the car he used for his work. Put another way, he did not demonstrate that it was unreasonable for his employer to expect him to use his vehicle in an efficient way, with the allowance being expected only to pay for such incremental use of his car as his work required."

The Queen v. Eggert, 85 DTC 5522, [1985] 2 CTC 343 (FCTD)

Counsel for the taxpayer unsuccessfully argued that "period" can import the whole taxation year so long as any selling occurred at any time in the taxation year.

Administrative Policy

S2-F3-C2 - Benefits and Allowances Received from Employment

Reasonable travel allowance

2.63 ...In general, expenses normally incurred while travelling from one place to another, including food, accommodation, and incidentals, are considered travel expenses.

2.64 ...[A]n allowance that approximates the reasonable out-of-pocket expenses the employee will incur while travelling for work is generally considered reasonable.

88 C.R. - F.Q.29

An employee who receives an allowance that is less than a reasonable amount and to which s. 6(1)(b)(v) otherwise applies would be required to include the allowance in income and would be able to deduct any deductible expenses under s. 8.

Subparagraph 6(1)(b)(vii)


The Queen v. Eggert, 85 DTC 5522, [1985] 2 CTC 343 (FCTD)

Since the taxpayer received a fixed monthly travel allowance that did not vary in accordance with the number of days he spent on the road, the allowance constituted employment income.

The Queen v. Paradis, 86 DTC 6029, [1985] 2 CTC 3 (FCTD)

A game warden received a set meal allowance from his employer of $2,500 which was calculated without regard to his travel time, and accordingly was not exempted under s. 6(1)(b)(vii).

The Queen v. Cival, 83 DTC 5168, [1983] CTC 153 (FCA)

It was suggested obiter that mileage reimbursements would not be an "allowance".

The Queen v. Lavers, 78 D.T.C 6230, [1978] CTC 341 (FCTD)

An employee who received a fixed allowance of $87 a month plus a mileage allowance of 9.8¢ per mile in respect of his car which he was required to use as a condition of his employment, was taxable on the monthly allowance. The monthly allowance was designed to compensate for fixed automobile costs and was not computed by reference to time actually spent by the taxpayer.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 172 - Subsection 172(1) 35

See Also

Morissette v. The Queen, 2013 DTC 1002 [at 21], 2012 TCC 37 (Informal Procedure)

CRA issued a directive stating that meal allowances of over $17 per meal would be considered unreasonable, and on that basis the taxpayer's employer treated his $20 meal allowances as a taxable benefit.

In allowing the taxpayer's appeal, Tardif J. found that:

  • the $17 threshold was arbitrary and unsubstantiated, and therefore there was no basis to conclude that $20 was unreasonable; and
  • whether an employer treats a benefit as a taxable benefit is ultimately irrelevant to its proper tax treatment, "particularly if it is the product of a superficial and arbitrary analysis" (para. 7).

Sénéchal v. The Queen, 2011 DTC 1357 [at 1997], 2011 TCC 365 (Informal Procedure)

The taxpayers were police union representatives. Lamarre J. affirmed the Minister's position that reimbursement from the union for meals were a taxable allowance rather than an excluded expense reimbursement because the union paid a fixed amount for each meal, irrespective of actual cost (para. 33). He also stated (at para. 34):

[T]he meal allowances that were included in the appellants' income were paid in connection with the appellants' performance of their duties within the municipality of Saguenay. Even though that municipality results from a merger of three former cities, the meals eaten within it cannot, in my view, be considered to have been eaten away from the municipality where the employer's establishment was located, or away from the metropolitan area where it was located.

Administrative Policy

15 November 2016 Internal T.I. 2015-0577201I7 F - Employés du transport

per kilometer “accommodation” allowances paid to long-haul drivers not in excess of their vouchered restaurant expenses were likely unreasonable

A trucking company pays its employed long-haul drivers allowances for accommodation expenses of $0.04 per kilometer (scenarios 1 and 3) or of $75 per day spent away (scenario 2). (In scenario 3, they also receive wages of $0.36 per kilometre.) The employees each sleep in the truck’s cab as a security measure, so that no expenses are generally incurred by them for accommodation – but their meal expenses, amounting to around $40 per day, are approximately twice the allowance amounts in scenarios 1 and 3 based inter alia on assumptions as to the number of kilometres travelled. Would the allowances received be considered as reasonable and, therefore, excluded from employment income under s. 6(1)(b)(vii)? CRA responded:

[T]ravel expenses include food, beverage and accommodation costs. In addition… the costs of showers are also considered to be deductible as accommodation expenses where a transport employee sleeps in the cab of the truck rather than in a hotel. …

[A]n allowance for accommodation expenses calculated exclusively on the basis of distance, time or other criteria will not be considered reasonable if it does not represent an estimate of the cost of accommodation that may be incurred by the employee during the travel that generated entitlement to the allowance. …

[W]here an employee sleeps in the truck cab, it is unlikely that the allowances for accommodation expenses in the three scenarios provided will be considered reasonable for the purposes of paragraph 6(1)(b).

Words and Phrases

IT-272R "Automobile and Other Travelling Expenses - Employees"

Where RC considers a travelling allowance claimed to be reasonably high and the employee is unable to provide acceptable evidence to show that the allowance was reasonable, the excess will be included in his income.

Subparagraph 6(1)(b)(vii.1)


Daniels v. Canada (Attorney General), 2004 DTC 6276, 2004 FCA 125

The Court rejected the taxpayer's submission that as a councillor with the County of Newell in Alberta, his place of business was the whole of the applicable County Division and found that an allowance received by him for travel between his home and the place of Council meetings was taxable on the basis of jurisprudence establishing that travel expenses incurred by a taxpayer in travelling to and from his home to his place of work are considered personal expenses.

See Also

Sénéchal v. The Queen, 2011 DTC 1357 [at 1997], 2011 TCC 365 (Informal Procedure)

The taxpayers were police union representatives. Lamarre J. affirmed the Minister's position that taxpayers' reimbursement from the union for motor vehicle expenses were to be included in income. Evidence suggested that a significant portion of the reimbursement pertained to travel from the taxpayers' homes. Moreover, the purported monthly distances driven tended to be round numbers like 100 or 400 kilometers. Lamarre J. concluded that the taxpayers' evidence was insufficient to establish that the reimbursement was a reasonable allowance for motor vehicle expenses.

Veinot v. The Queen, 2010 DTC 1097 [at 3017], 2010 TCC 112 (Informal Procedure)

The taxpayer, who was employed as a forestry equipment operator, was required to travel to various remote logging sites with a forestry vehicle. His employer paid an allowance, but disallowed the first 50 kilometers of each trip on the basis that the taxpayer was assumed to head to the employer's office first (a personal expense), and from there to the logging site. Woods J. found at paras. 16-18 that no portion of the drive to the site was a personal expense. The general principle, that travel from home to work is a personal expense, is typically confined to cases where the taxpayer's destination is a regular place of business.

Woods J. found at paras. 20-22 that the allowance could not be excluded from income under s. 6(1)(b)(vii.1), because it was not a "reasonable allowance." The allowance was not calculated solely on the basis of kilometers but included other factors such as which equipment was being transported. Moreover, the allowance was not intended to reimburse all employment-related costs, but only to provide some assistance. However, because the allowance was not reasonable, s. 8(1)(h.1)(iii) did not apply and the taxpayer was entitled to deduct his motor vehicle travel expenses.

Campbell v. The Queen, 2003 DTC 420, 2003 TCC 160 (TCC) (Informal Procedure)

Travel allowances (calculated on a per-kilometre basis) received by the taxpayers in respect of their mandatory attendance at School Board meetings in connection with their duties of employment were not includable in their income given that they maintained offices in their homes, so that when they went from their home offices to the School Board premises they were engaged in carrying out their duties of a School Board member.

Administrative Policy

2 February 2017 Quebec CPA Individual Taxation Roundtable Q. 1.5, 2016-0674801C6 F - Allocation et frais d'une automobile

general reasonability of a car allowance rate of $0.54/$0.48 per kilometre including for electric vehicles

Can an employer pay an allowance to an employee using the most favorable of the following three methods: the travel allowance set by the Treasury Board ($0.49 per km. of Quebec travel as of July 1, 2016); the Reg. 7306 rate of $0.54 per km for the first 5,000 km and $0.48 per km for the excess; and the employee’s actual out-of-pocket expenses? Do the same principles apply to an electric car? CRA responded:

[T]o establish that a per-kilometer rate is reasonable, the following could be taken into account: the type of vehicle, the road conditions, and the cost of gasoline or the electricity rate at the specific venue. …

Generally, the CRA considers a rate based on kilometerage to be reasonable if it corresponds to the rate prescribed under ITR section 7306…[provided the] employee pays all expenses related to the motor vehicle. However, a rate different from that prescribed may be considered reasonable in light of the particular facts of a situation. …

[T]he CRA does not have a specific policy on per-kilometre allowances for an electric motor vehicle.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(k) - Subparagraph 6(1)(k)(v) electric vehicles treated the same 56

3 December 1993 T.I. 932457 (C.T.O. "Automobile Allowance, Less than Reasonable Amount?")

RC will consider an automobile allowance to be less than a reasonable amount (with the result that the employee is entitled to include the allowance in income and claim the related business expenses to the extent they are reasonable) where the employee's total expenses for business use in the year exceed the total allowances received in the year. The Department's position regarding what should be considered motor vehicle expenses is contained in IT-522, para. 3.

90 C.R. - Q3

An employee's automobile allowance is not reasonable where the employee's total expenses for business use in a year exceed the total allowance received in that year.

88 C.R. - "Automobile Rules" - Allowances to Employees"

An employee may not include in his income an allowance that is excluded by s. 6(1)(b), and then claim a deduction for his actual expenses.

Subparagraph 6(1)(b)(x)

Administrative Policy

24 June 2016 Internal T.I. 2014-0555611I7 F - Allocation raisonnable

kilometer-based minimum allowance must be intended to compensate for actual expenses

Did 2012-0460481E5 (which found that a fixed allowance of $4.60 for each trip made of less than 10 kilometres in the same day in running errands for the employer was deemed to be unreasonable by s. 6(1)(b)(x)) modify 2007-0228521I7 (which accepted the employer’s compensation policy of providing for a daily minimum payment where the number of kilometres traveled per employee was less than a specified number). In indicating no change, CRA stated (TaxInterpretations translation):

[A] minimum daily allowance based on the number of kilometres traveled should not have adverse tax consequences if it is representative of the actual use of a vehicle and is established to compensate an employee for expenses actually incurred for the use of the employee’s vehicle in the performance of duties of employment. This position is still in effect.

28 March 2013 External T.I. 2012-0460481E5 F - Allocation pour usage d'un véhicule à moteur

fixed allowance of $4.60 for each trip under 10 kilometres deemed unreasonable

An employee could receive a fixed allowance of $4.60 for each trip made of less than 10 kilometres in the same day in running errands for the employer. CRA found that, for the purposes of s. 6(1)(b)(vii.1), the allowance was deemed by s. 6(1)(b)(x) not to be reasonable as it was not based on the number of kilometres traveled, so that it was includible in employment income.

7 May 2007 Internal T.I. 7 May 2007 Internal T.I. 2007-02285217 - Allocation pour frais de déplacement

daily minimum payment based on kilometres travelled

The employer’s compensation policy provided for a daily minimum payment where the number of kilometres traveled per employee was less than a specified number. CRA concluded that such allowance for the use of a motor vehicle was not deemed to be unreasonable by s. 6(1)(b)(x) as it was based solely on the number of kilometres traveled.

2 May 1990 T.I. (October 1990 Access Letter, ¶1448)

Where an employee receives a fixed car allowance of $10 a month and an allowance of 21¢ per kilometre, the per-kilometre allowance will not have to be included in the taxpayer's income despite the fact that both allowances were paid for the same use of the motor vehicle, provided that the lump sum payment is a separate allowance from the per-kilometre allowance.

88 C.R. - "Automobile Rules" - Allowances to Employees"

Flat monthly payments or advances that are based on an estimate of business kilometres to be driven with an agreement for a year-end adjustment based on the actual business kilometres driven, will satisfy the requirement in s. 6(1)(b)(x).

  • A car allowance generally (but not always) will be considered reasonable if it does not exceed the 27 cents/21 cents amount.
  • For 1988, where records are not available to substantiate the computation of a per kilometre allowance, RC is prepared to consider such other substantiation of the reasonableness of the allowance as may be available.

Subparagraph 6(1)(b)(xi)

Administrative Policy

8 February 1994 Memorandum 940065 (C.T.O. "Employment Expenses")

"A reimbursement is usually considered as a repayment of an expense actually incurred and an allowance implies an amount paid in respect of some possible expense without any obligation to account for any actual expense." Given this distinction, the phrase, "reimbursed in whole or in part" in s. 6(1)(b)(xi) would not include flat rate allowances.

Words and Phrases

October 1989 Revenue Canada Round Table - Q1 (Jan. 90 Access Letter, ¶1075)

Where the employer paid a yearly lump sum for trips within a 20-kilometre radius of the employer's place of business, and a reasonable allowance based on the distance travelled for trips outside this radius, the lump-sum allowance was taxable, but because the lump-sum allowance could not be considered as a reimbursement in whole or in part of expenses, the second allowance would not be taxable.

88 C.R. - F.Q.26

Where the employer provides an automobile allowance to an employee but is also billed directly for a portion of the automobile expense the allowance will be considered to be reasonable if it is calculated on a per kilometre basis and is only related to the costs actually paid by the employee.

Paragraph 6(1)(c) - Director’s or other fees

Administrative Policy

17 December 2012 External T.I. 2012-0458071E5 - Per Diem Fees

Per diem judges and per diem justices of the peace, who are former full-time judges and former full-time or part-time justices of the peace, are paid a fixed rate per day of work, and are not provided with an office space, office supplies or secretarial/administrative assistance. In finding that such receipts are taxable under s. 6(1)(c), CRA stated that the:

case law on the subject...specifies that a legal entitlement to a per diem rate of remuneration established in advance is sufficiently "fixed or ascertainable" to meet the definition of an "office".

15 February 1994 T.I. 933686 (C.T.O. "Waived Conference Fees")

Where a non-profit corporation holds an annual conference each year in a selected Canadian city and asks each of its directors to attend the conference free of charge, the waived conference fee will not be considered to be in the nature of a director's fee if the main purpose in requesting the directors' attendance was to further the aims and objectives of the corporation.

Paragraph 6(1)(e) - Standby charge for automobile


Babich v. Canada, 2013 DTC 5010 [at 5556], 2012 FCA 276, aff'g 2010 TCC 352

The taxpayer ("Babich") was the sole shareholder of a corporation ("Able") which provided a car exclusively for use (both personal and business) by Babich's mother and by his father, who was the corporation's general manage. V.A. Miller J. stated (at TCC para 22):

I conclude from all of the evidence that a benefit was conferred on Babich. The Automobile was owned by Able and all expenses were paid by Able. Babich was the sole shareholder of Able and he allowed his parents to have exclusive use of the Automobile for both personal and business purposes. According to subsection 15(5), the value of the benefit to be included in a shareholder's income with respect to an automobile relates to an automobile made available to the shareholder or to a person related to the shareholder.

Sharlow J.A. dismissed the taxpayer's contention that the benefit should have been taxed in the hands of his parents pursuant to s. 6, rather than in his hands under s. 15(1). The Court was satisfied that the trial judge's decision was "correct in law and is consistent with the evidence presented to her" (FCA para. 11).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) shareholder rather than employee benefit 186

Canada v. Adams, 98 DTC 6266 (FCA)

The taxpayers were car salesmen who leased automobiles from the dealership, were required to ensure that the vehicles were on the premises of the dealership during normal business hours and free of personal items, and otherwise could use the automobiles as they wished. In overturning a finding of the Tax Court that in these circumstances s. 6(1)(e) did not apply because the taxpayers did not have "unrestricted use" of the automobiles, Robertson J.A. found (at p. 6270) in light of the broad language of s. 6(1)(e) and its legislative history that "the purpose for which the employer's automobile was made available is not a relevant consideration".

Bouchard v. The Queen, 83 DTC 5193, [1983] CTC 173 (FCTD)

A company's Rolls Royce which it made available to its President and chief shareholder ("Bouchard") was found to have been used 90% of the time by Bouchard for the company's business, including such functions as the inspection and supervision of retail outlets, visits to customers and the delivery of bearings in emergency situations. Since the personal use was thus incidental, the pre-1983 version of S.6(1)(e) did not apply.

The Queen v. Harman, 80 DTC 6052, [1980] CTC 83 (FCA)

It was held under the pre-1983 version of S.6(1)(e) that an employee's "employer made an automobile available to him in the year for his personal use" where the facts establsihed "that the employer provided an automobile necessary for and predominantly for the use of the employee in his employer's business, and although the employee had permission to use it for personal purposes the opportunity to do so was minimal."

See Also

Potvin v. The Queen, 2008 DTC 4813, 2008 TCC 319 (Informal Procedure)

The provision of a truck to the taxpayer's husband by a corporation of which she was the sole shareholder and he the principal employee was found to be a benefit to her under s. 15(1) (as assessed by the Minister) rather than under s. 6(1)(e) given that the work performed by him in the year in question was negligible (the corporation had largely ceased operations). Accordingly, the benefit was conferred on her husband by reason of her shareholding rather than by reason of his employment.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) negligible work - therefore shareholder benefit 84

MacMillan v. The Queen, 2005 DTC 1243, 2005 TCC 583 (Informal Procedure)

The taxpayer (a vehicle fleet maintenance manager) was required by his employer (B.C. Hydro) to keep a dedicated Hydro van at home during hours that he was not working in order that he could be called out on emergencies. He was prohibited from using the van other than for commuting to and from work and in connection with the performance of his duties.

In these circumstances, the van had not been "made available" to him.

Administrative Policy

7 October 2016 APFF Roundtable Q. 5, 2016-0652861C6 F - Véhicules électriques - rabais

use of manufacturer’s electricity-use standard

Respecting where an electric vehicle used for business purposes or in the course of employment is charged at home and there is no electricity meter specific to the vehicle, CRA referenced use of the per-kilometre electricity standard provided by the manufacturer in determining the annual electricity cost, stating:

[T]he establishment of an average per-kilometer energy cost could be a reasonable method. In such a situation, the taxpayer would also need to take into account the use of pay-charging stations or free charging stations in establishing those costs.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A installation cost included 31
Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) Quebec government assistance does not reduce cost of purchased vehicle, but treated as compensation to dealer-lessor prorated over term of lease 249
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(g) vehicle assistance paid indirectly (to dealer) covered 225
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A cost not reduced under general principles by government assistance 137

7 September 2012 Internal T.I. 2012-0434341I7 - Taxable benefit chauffeur of employer-provided car

In discussing whether there is a taxable benefit to the driver of an executive's employer-provided automobile, CRA noted that it was its long-standing position "that travel between employees’ homes and their regular place of employment (RPE) is personal travel," and then commented:

Where a driver picks up and drops off an executive at his or her residence on a regular basis, it is the CRA’s view that the executive’s residence is a RPE for the driver. Travel between the driver’s home and the executive’s residence would therefore be personal travel for the driver....However, if the driver only occasionally drives the executive to his or her residence, then the executive’s residence will not be a RPE for the driver providing there are various times and locations for the daily pick-up and drop-off of the executive.

November 1991 Memorandum (Tax Window, No. 12, p. 7, ¶1568)

Where pick-up trucks are supplied by forest industry employers to employees for use in their work as well as for travel between home and work, the normal automobile rules apply.

2 November 89 Policy and Systems Branch Letter (May 1990 Access Letter, ¶1204)

The rules normally applicable to employer-provided vehicles also will apply to police and fire department cars.

89 C.R. - Q.48

An automobile will be considered to be available to the employee where: the employee is absent from the country on business and leaves the automobile at the airport parking lot; he is on holiday and leaves the automobile parked on the employer's premises; the automobile is being repaired at a garage; and he is ill or disabled.


M. Tang, G. Katz, "Automobile Taxable Benefits and Expenses: Part 1", 1997 Canadian Tax Journal, Vol. 45, No. 5, p. 1150.

Summerville, "Stand-by Charge May Be Reduced by Leaving Company Car in Employer's Control", Taxation of Executive Compensation and Retirement, September 1990, p. 326.

Paragraph 6(1)(e.1) - Group sickness or accident insurance plans

Paragraph 6(1)(f) - Employment insurance benefits


S. 6(1)(f) provides for the inclusion in an employee's income of periodic amounts received under a sickness or accident insurance plan, disability insurance plan or income maintenance insurance plan that was funded by the employer. (Such amounts will still be taxable to the employee, even where the employee has made contributions to the plan, if the employer also has made any contribution to the plan - see Dagenais.)

Amounts may be considered to be "periodic" even though they are payable only during periods of illness or injury, their amounts depend on the most recent wage level of the employee and they may not be paid on time (Leonard). Under the surrogatum principle (i.e., the principle that a compensatory payment such as an award of damages has the same character as that which it is intended to compensate for), a lump sum received in settlement of a claim for periodic disability payments that were alleged to be owing to the taxpayer will itself be taxable under s. 6(1)(f) notwithstanding the lump sum character of the payment (Tsiaprailis).

Amounts received by the taxpayer may be taxable under s. 6(1)(f) notwithstanding that the disability may have subrogation rights to recover damages received by the taxpayer (see Harnish).


Tsiaprailis v. Canada, 2005 DTC 5119, 2005 SCC 8, [2005] 1 S.C.R. 113

The taxpayer received a lump sum payment of $105,000 in settlement of her claim for wrongful termination of her long-term disability benefits. Although the portion of the settlement that was in respect of future disability benefits was not paid "pursuant to" the plan because there was no obligation on the part of the insurer to make a lump sum payment under the terms of the plan, under the surrogatum principle, the portion of the lump sum payment that was intended to replace past disability payments was taxable to her under s. 6(1)(f).

Words and Phrases
periodic pursuant to

Leonard v. The Queen, 96 DTC 6518 (FCTD)

The collective agreement between the taxpayer's union and his employer called upon the employer to pay premiums to an insurance company for weekly indemnities payable to employees in case of sickness or injury. Payments received by the taxpayer under this plan were includable in his income. Joyal J. indicated that payments could be "periodic" notwithstanding that they were payable only during periods of illness or injury (as opposed to being payable during fixed periods of time), that their actual amounts would depend on the current wage levels of the employee, and that they were not paid on time.

Words and Phrases

Dagenais v. The Queen, 95 DTC 5318 (FCTD)

The taxpayer, who was a member of a trade union that had negotiated short-term weekly indemnity benefits and long-term disability benefits with his employer, was unable to establish that the benefit package was an employee-pay-all plan. In particular, although there was some suggestion the employees had accepted a lower hourly rate increase in order to gain improvements to the benefit package, no evidence was proffered with respect to any concise or exact amount which they had paid for the benefits package.

See Also

Watts v. The Queen, 2004 DTC 3111, 2004 TCC 535 (Informal Procedure)

Periodic disability payments received by the taxpayer under the Canada Pension Plan were not received in respect of a "disability insurance plan" and instead were taxable under s. 56(1)(a). Bowman, ACJ stated (at para. 18):

"Insurance is essentially a contractual arrangement between an insured and an insurer and involves an obligation by an insurer, upon payment of premiums, to pay an amount upon an event whose recurrence is in a certain period."

Harnish v. The Queen, 2007 DTC 1317, 2007 TCC 546 (Informal Procedure)

Periodic payments received by the taxpayer under a long-term disability plan were income to him withstanding that he signed a subrogation agreement with the insurer in which he agreed to pay 75% of any net amounts he recovered from third parties as a result of the accident causing his inability to return to work, given that this requirement to repay funds was a condition subsequent and did not affect the character of the amounts received as income.

Fry v. The Queen, 2001 DTC 846 (TCC)

A lump-sum received by the taxpayer in settling a claim against her employer's group disability insurer in respect of a motor vehicle accident was not taxable under s. 6(1)(f) (given its lump sum character), nor was it taxable under s. 6(1)(a) given (p. 848) that "the subject matter of payment under an accident plan [was] dealt with under paragraph 6(1)(f)".

Cook v. The Queen, 95 DTC 853 (TCC)

A lump sum received by the taxpayer in settlement of an action that she had brought against Great-West Life Insurance Company for its denial of benefits under a disability benefits policy issued to her employer, was not taxable to her under s. 6(1)(f) because it was not payable on a "periodic basis".

Administrative Policy

Employee contributions


Amounts included in income under paragraph 6(1)(f) may be reduced by the total amount of any contributions made by the employee to the particular plan before the end of the year, provided that these contributions have not already reduced the amount of benefits previously received by the employee.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(4) 20

8 July 2013 Internal T.I. 2012-0470021I7 - Settlement of Future Benefits – ASO Plan

CRA noted that an employer's group disability plan which was administered by an administrator (such as an insurance corporation) on an administrativee services only basis nonetheless would qualify as an insurance plan ("IP") (and a wage loss replacement plan ("WLRP")) for the purpose of paragraph 6(1)(f) of the Act, if it contained "an undertaking by one person to indemnify another person, for an agreed consideration, from a loss or liability in respect of an event, the happening of which is uncertain." When asked whether the "decision in Tsiaprailis, 2005 DTC 5119, would apply to characterize a payment made by the administrator to an employee in settlement of future periodic benefits under the disability plan as a capital receipt from the disposition of a right," CRA stated:

…where it is established that the ASO plan is an IP and therefore a WLRP, the decision of the SCC in Tsiaprailis would apply to characterize the amount of a settlement for future WLRP benefits as a capital receipt from the disposition of a right….

Subparagraph 39(1)(a)(iii)...would exclude the capital receipt from the disposition of an employee's right under an ASO plan, if the plan was an IP, from the employee's income.

However where an employee receives such a settlement amount under an employer's ASO plan that is not an IP, the amount would be included in the employee's income under subsection 5(1) or section 6….

12 February 2013 Internal T.I. 2013-0475631I7 - Treatment of Settlement Amounts

It is contemplated that a lump sum would be paid to the individual plaintiffs in a class action suit in settlement of their allegation that monthly long-term disability benefits received by them should not have been reduced by monthly benefits under the Pension Act. Applying the surrogatum principle in Tsiaprailis, CRA found that this amount would be taxable and included in the recipient's employment income in the year received under s. 6(1)(f), although it would qualify for relief under s. 110.2(2).

22 November 2006 External T.I. 2006-018944 -

Where an employee-pay-all disability plan becomes a plan in which the employer makes 100% of the contributions, an employee in receipt of benefits at the time the plan is converted may continue to receive non-taxable benefits in such amount and for such length of time as may have been specified in the plan when benefits commenced. If an employee's benefits commence after the conversion, the benefits will be included in income under s. 6(1)(f) and, given that such conversion results in a new plan, contributions made by the employee to the prior plan cannot be deducted from benefits received from the new plan.

31 July 2002 External T.I. 2002-014533 -

For a disability insurance plan to be an employee-pay-all plan, the employees must be legally responsible for paying all the premiums, notwithstanding that the employer may withhold the premiums from the employees' wages and remit them on behalf of the employees.

3 November 2000 External T.I. 2000-005068 -

The existence of an employee-paid-all plan is not determined by looking at the manner in which payments are made or reported, but rather is determined by ascertaining who is contractually obligated to pay the premiums. If the legal obligation for paying the disability plan premiums is split 50-50 between the employer and the employee, an employee would be subject to tax on any benefits received under the plan under s. 6(1)(f) to the extent that they exceed the deduction under s. 6(1)(f)(v) in respect of employee contributions.

5 July 1995 T.I. 950703 (C.T.O. "Disability Plans with Employee Pay Option")

An employee pay-all plan can be considered to exist separate from a plan to which the employer contributes even if the plans are co-ordinated to ensure that disability income does not exceed a stipulated percentage of pre-disability income.

22 June 1994 T.I. 940981 (C.T.O. "Wage Loss Replacement Plans")

Where the employer makes all contributions to one long term disability plan and it is intended that the employees will make all the contributions to a second long term disability plan, the fact that the premium in the first year will be identical for a member of either plan would not, by itself, result in the existence of two plans. However, if in light of all the circumstances, the employer premiums paid to the insurance company in respect of the first plan should have been lower than the premiums for the second plan, the excess premiums paid by the employer would be regarded as a contribution made by the employer to the second plan.

9 June 1994 Memorandum 940594 (C.T.O. "Settlement of Damages")

Amounts received in settlement of an action relating to an entitlement to long-term disability benefits were viewed as being a settlement of the taxpayer's right to sue for damages and, accordingly, were not required to be included in income.

15 February 1994 T.I. 932983 (C.T.O. "Conversion of an Ltd Plan")

Where an individual with a degenerative disorder begins to receive L.T.D. benefits subsequent to the conversion of an employee-pay-all Ltd plan to a second plan under which the employer makes all contributions, the benefits likely will be taxable under s. 6(1)(f).

16 December 1993 T.I. 932039 (C.T.O. "Employee Pay all Accident Insurance Plans")

"The issue of whether or not an employee-pay-all plan exists is not determined by considering who paid the related premiums. Rather, the question of whether an employee-pay-all plan exists depends upon whether the plan itself places upon the employees the legal obligation to pay 100% of the premiums ... Of course, where the employer can be regarded as having paid a part of an employee's Ltd premium that the employee is legally obligated to pay, that part must be treated in the manner of salary or wages received by the employee."

2 November 1992 T.I. 922363 (September 1993 Access Letter, p. 404, ¶C5-212)

Discussion of treatment of payments from the plan after the employer rather than the employees becomes required to make all contributions to the plan.

20 August 1992 Memorandum 922092 (April 1993 Access Letter, p. 130, ¶C5-190; Tax Window, No. 23, p. 21, ¶2159)

Benefits which arise subsequent to the conversion of a taxable plan to a non-taxable plan are included in income unless those benefits are in no way conditional on participation in the old plan.

18 February 1992, T.I. 913508 (March 1993 Access Letter, p. 65, ¶C5-185)

Discussion of a disability plan which includes a provision whereby the normal employee contributions to a registered pension plan will be funded by the disability plan in the event of disability.

14 February 1992 T.I. 193385 (January - February 1993 Access Letter, p. 7, ¶C5-182)

Discussion of various issues arising where an employer provides both taxable and non-taxable disability benefits to employees.

28 January 1992 Memorandum (Tax Window, No. 16, p. 17, ¶1723)

Where an individual receives a lump-sum payment pursuant to a consent to judgment of the Supreme Court of Ontario and as a result of a claim for coverage under a long-term disability plan in respect of injury in an automobile accident, the payment will be included in his income under s. 6(1)(f).

11 July 1991 Memorandum (Tax Window, No. 6, p. 11, ¶1349)

Re employee-pay-all plans.

8 May 1991 T.I. (Tax Window, No. 3, p. 28, ¶1246)

Where an employee is obliged to pay deficiencies under a wage loss replacement plan funded by employee premiums and is entitled to plan surpluses, any payments made by the employer to the plan, voluntary or otherwise, will constitute employer contributions, with the result that benefits received by the employees are taxable.

9 Aug. 89 T.I. (Jan. 90 Access Letter, ¶1076)

If the employer pays administration expenses, claim handling charges, legal expenses, actuarial fees or any other charges required in the establishment, operation, or winding-up of a group long term disability plan, then that plan will not qualify as an employee-pay-all plan for purposes of IT-428, para. 16.

Paragraph 6(1)(g) - Employee benefit plan benefits

Administrative Policy

88 C.R. Q.4

Interest income earned in a "money purchase" pension plan which was funded by an employer in respect of services rendered by an employee while a non-resident of Canada fall under s. 6(1)(g)(iii) when such interest forms part of a pension benefit, regardless whether the interest was earned while the taxpayer was resident in Canada.

Paragraph 6(1)(k) - Automobile operating expense benefit

See Also

Szymczyk v. The Queen, 2014 TCC 380 (Informal Procedure)

late designation not permitted/rule-of-thumb method invalidated by s. 6(1)(k)

The taxpayer's employer, General Motors of Canada Limited, assigned a new vehicle to the taxpayer and about 350 other senior managers or executives no less frequently than every three months for their personal and business use, but on the basis that they would identify shortcomings in the models and promote them to friends and acquaintances. The Minister authorized GM in 1982 to use a simplified method which treated the s. 6(1)(a) benefit from GMCL's payment of the vehicle operating costs as being equal to 50% of those costs.

Woods J upheld the Minister's reassessments of the taxpayer's 2008 and 2009 taxation years on the basis that the benefit under s. 6(1)(k) was equal to $0.24 per kilometer of personal use, which was assumed to be 20,004 kilometers per year. The enactment of s. 6(1)(k) in 1993 invalidated the 1982 authorization, and the taxpayer had not established any prima facie case as to the personal kilometers driven so as to displace the Minister's assumption on personal use. Furthermore, no designation to compute the benefit based on ½ the standby charge had been made in the relevant years as required in s. 6(1)(k).

See also summary under General Concepts - Estoppel.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Estoppel Minister's authorization should not be set aside too readily as being contrary to law 317
Tax Topics - General Concepts - Onus Minister's "partly arbitrary" assumptions did not remove onus from taxpayer 317
Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) separate personal use kilometers required for each vehicle used in year 169

Administrative Policy

26 June 1995 Memorandum 950088 (C.T.O. "Automobile Expense Benefit")

Any amounts paid by an employee to a third party not related to the employer for the operating expenses of an employer-provided automobile will not reduce the operating expense benefit.

14 March 1995 T.I. 942891 (C.T.O. "Whether Travel Personal or Business")

"The Department's long standing position that travel between the home and workplace is personal in nature is not altered by the fact that an employer may require an employee to perform an employment-related function (such as an area patrol or a delivery or pick-up) during the course of the trip between the home and workplace. Where the primary purpose of a particular trip is personal in nature, then it is treated as such for tax purposes regardless of any employment activity which may take place during the course of that trip."


Yull, "New Automobile Rules Call for a Review of Remuneration Strategy", Taxation of Executive Compensation and Retirement, March 1994, p. 883.

Subparagraph 6(1)(k)(v)

Administrative Policy

2 February 2017 Quebec CPA Individual Taxation Roundtable Q. 1.5, 2016-0674801C6 F - Allocation et frais d'une automobile

electric vehicles treated the same

The computation of the operating expense benefit under s. 6(1)(k)(v) and Reg. 7305.1 is $0.26 per km traveled for personal use, where the employer assumes the operating expenses. Does this rate also apply to electric cars? CRA responded:

[T]he computation is the same regardless of the source of energy that powers the motor of the automobile.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(b) - Subparagraph 6(1)(b)(vii.1) general reasonability of a car allowance rate of $0.54/$0.48 per kilometre including for electric vehicles 174

Paragraph 6(1)(l) - Where standby charge does not apply