By virtue of a program put in place by the Quebec government, a subsidy, which can amount to $8,000, is offered where an electric vehicle is purchased or rented. Where the car dealer is a partner in this "Drive Electric Program" and the participant authorizes the government to pay the rebate directly to the dealer, this assistance is actually a deposit paid or to be paid to the dealer on the purchase or lease. In determining the taxable benefit from employee use, should the purchase price (or rental cost) be determined before or after the application of the rebate? (b) What is the incidence of the subsidy on CCA where the pre-tax cost of the vehicle is $25,000, $35,000 or $45,000? CRA responded:
[I]n the case of a purchased electric vehicle… the "cost of the automobile to the employer" in the formula in subsection 6(2) would not be reduced by the amount of financial assistance provided… .
[I]n the case of a leased electric vehicle… it would be reasonable to consider that the deposit is an amount payable to the lessor. Thus, the amount of the financial assistance paid would be a lump sum payment that should be prorated over the term of the lease for the purposes of calculating the “total amount that can reasonably be regarded as payable to the lessor” in subsection 6(2).
Finally, where the participant receives the rebate directly from the Québec government…the financial assistance would not reduce the reasonable standby charge for use of an automobile.