When does a benefit arise (the personal use)
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When does a benefit arise (the personal use)
A benefit arises for the employee when there is personal use of the vehicle. The following information applies to both an automobile and other vehicle.
An employee may use a vehicle supplied by the employer, or person related to the employer, for purposes other than the employer's business. This is considered personal use of the employer-provided vehicle, whether it is owned or leased by the employer, and is a taxable benefit to the employee. Personal use includes driving between the employee's personal residence and his or her regular place of work as well as any unexpected trips arising as a result of a call to return to work outside the regular hours of employment. This is a long-standing position held by the CRA.
Exceptions
An exception occurs when the employer requires the employee to proceed directly from home to a point of call other than the employer's place of business to which the employee reports regularly, or to return home from such a point. In other words, these trips are not considered to be of a personal nature.
Example 1
The employer requires that the employee:
- travel first thing in the morning directly to a business meeting held at a client's office;
- go directly from home to a customer's premises to make repairs; or
- return home from a point of call where he visited clients (a salesperson).
Example 2
The employer infrequently and irregularly provides a vehicle that the employee brings home on the day before the specified business travel, and the following morning (or vice-versa), the employee proceeds from home to:
- a meeting with an out-of town client;
- a training course (other than the place of business); or
- a conference (other than the place of business).
Another exception occurs when privately-owned motor vehicles are prohibited from entering a restricted area where the employment duties are performed, and when the distances to be travelled within the restricted area are such that a motor vehicle is necessary. The use of the employer's vehicle within the restricted area is not considered to be for personal use.
There is not a personal use component when:
- an employee is required to work at least three additional hours immediately subsequent to the regular hours of work;
- the occurrence of such overtime is occasional; and
- public transportation is not available or the physical safety of the employee is at risk at the time of travel.
Allowances or the value of employer-provided transportation provided to employees for transportation between the employees' residence and special work sites or remote work locations are not taxable. For more information, see Interpretation Bulletin IT91R4, Employment at Special Work Sites or Remote Work Locations.
Employer-provided transportation from pick-up points to a location of employment where, for security or other reasons, public and private vehicles are either not welcome or not practical is not taxable.
In cases where travel includes both a personal element and an employment element, we consider the primary purpose of a particular trip to determine whether it is personal or employment related. It is always a question of fact, and as such, the CRA has not established any specific guidelines or criteria in this regard.
Regular place of employment
Determining whether a particular location is a regular place of employment is a question of fact that requires a review of all the relevant facts of each case. Generally, a regular place of employment is any location at which or from which the employee regularly (as a rule) reports for work. For example, if the employee has an office, it is that office; if the employee normally reports to a warehouse, it is that warehouse. The CRA may consider the regularity of the reporting and the nature of the duties when determining whether a location is a regular place of employment.
To summarize, a regular place of employment is a work location where the employee, in connection with his or her duties, files reports, receives instructions or employment information, or performs other employment related duties. In some cases, a regular place of employment can be an office in the home.
Home offices
If an employee is required to have an office at home and that is where his or her employment duties are based, that office would become the individual's regular place of work. Consequently, the travel from his or her residence to another location (other than the employer's) in connection with the employment duties would be business related and not personal. However, in the following example we considered travel from a home office to be personal in nature.
Example
The employee's regular place of work is his or her home office but is required to regularly attend staff and other meetings at the main office. The main office becomes a second regular place of employment because the employee is viewed as having two locations from which he or she regularly performs the duties of employment: her home office and the employer's main office. Consequently, travel between the home office and the main office is personal in that she is travelling from home to a regular place of work even though she only reports to the main office once or twice per month.
More than one regular place of work
Sometimes you may require the employee to report to more than one regular place of employment for example, the place of employment can change from time to time because of the nature of the employment situation.
Consider the following examples where we determined that each site was a regular place of employment.
Example 1
Regular place of employment
Company XYZ employs a district manager who is responsible for visiting retail stores within the region and who must also report once a week to the head office store where he has an office. The company provides the manager with a vehicle. He travels between his residence and the various stores within the region, including the head office store. The CRA determined that each store, including the home store, was a regular place of employment. Consequently, all driving between any of the stores and the managers' home was personal.
Example 2
Regular place of employment
Construction tradesmen traveled from their homes directly to a job site (the employer did not have site offices or trailers at the job sites), between job sites during the course of the workday, and home from another job site at the end of the day. It was determined that each job site was the employer's regular place of business and that the CRA would generally consider the travel from home to the job site and from the job site to home as personal travel. However, travel between job sites during the course of the workday would be business related.
The following is an example where we determined that the travelling is not personal.
Example 3
Travelling is not personal
The forestry workers reported to a forest camp where they received instructions, prepared reports, etc. and also reported to various cutting sites. The CRA determined that the forest camp set up by the employer was a place of business of the employer and that, in most cases, a forest worker reported regularly to this forest camp. However, the CRA determined that certain cutting sites may not be considered to be regular work sites provided that the forestry worker reported to different cutting sites every week or every two weeks and did not return to the same cutting site for the remainder of the season.
Then again, consider the following situation where we were of the opinion that the travel could be either business-related or personal.
Example 4
Travel could be either business-related or personal
The workers travelled from home to different field locations to undertake duties such as meter readings. It was determined that if the workers travelled from home to various customer's locations to read the meters, the first and last trip (from and to home) would be considered to be business travel as well as all trips in-between.
Conversely, if the travel was to read the employer's meters in various locations, perhaps every week or so, the locations would likely be regular places of employment and as such, the first and last trip (from and to home) would be personal travel.
In the first situation, the travel is not considered to be personal given that the various customer locations are not regular places of employment, whereas the travel in the second scenario is considered personal because it is travel to a regular place of employment even though it is only done periodically.
Logbooks
Employers, employees, and shareholders are required to keep sufficient records to determine the business and personal use amounts of the total kilometres driven in a calendar year by an employee or a person related to the employee. A logbook or daily record of kilometres travelled for business and non-business use is generally sufficient for this purpose. The logbook should also contain the date, the destination and purpose - name and address of the client - and the distance travelled for each trip. It is ultimately the responsibility of the employee to keep adequate logbooks to justify the business portion of the travel.
- Date modified:
- 2015-12-17