Principal Issues: [TaxInterpretations translation] Is the reimbursement for gasoline in a particular situation a taxable benefit?
Position: Yes.
Reasons: Application of the Act and previous positions.
Federal Tax Roundtable 7 October 2011
2011 APFF Conference
2. Carpooling
As part of a program to reduce its greenhouse gas emissions, a corporation set up a carpooling program for its employees. That program applies to business trips as well as those between home and work.
For example, an employee who brings another employee to their place of work is reimbursed for 50% of the cost of gasoline upon presentation of invoices and certification from the other employee. In the case where an employee drives two or more other employees, the employee is reimbursed for 100% of the cost of gasoline (again supported by gasoline bills and certification of the employees who were driven).
Questions to the CRA
A) Could the gasoline reimbursement be considered non-taxable to the employee using his or her vehicle?
B) If the answer to the previous question is negative, how should the taxable benefit be calculated for an individual who uses his or her vehicle and for the individuals who have benefited from being transported (in the two situations described above)?
CRA Response
In general, the amount of a reimbursement of expenses received by an employee for the use of a motor vehicle in the performance of the duties of an office or employment does not constitute income to the employee, unless the amount is paid for the employee's personal expenses. For that purpose, we are of the view that the travel expenses incurred by an employee to travel between the employee’s residence and the employer's establishment to which the employee reports for work are personal expenses of the employee.
In the situation that you have presented to us, the portion of the reimbursement amount that relates to personal expenses of the employees will constitute a taxable benefit to such employees pursuant to paragraph 6(1)(a). Normally, the amount of the taxable benefit should be included in the income of the employee who received the reimbursement. However, the CRA accepts that the amount of that taxable benefit is to be reasonably allocated between the employee who used his or her automobile and the employees who received the transportation. In each situation, the employer and employees should agree among themselves to make a reasonable allocation.
Isabelle Landry
(450) 623-0193
October 7, 2011
2011-041194