Principal Issues: [TaxInterpretations translation] 1. Are weekend days included in computing the automobile standby charge?
2. Is the use of a motor vehicle provided by an employer for travel between the employee's home and a place where the employee is required to work in an emergency situation personal in nature?
Position: 1. Every day that an automobile is made available to an employee - including weekend days - is included in the calculation of the use of an employer-provided automobile until the employee surrenders control of it to the employer.
2. Question of fact. Travel by employees on evenings and weekends in response to emergency calls to a fixed location where the employee regularly reports would be travel of a personal nature. However, if an employee travels directly to a location where the employee is called to respond to an emergency situation, which is not a regular place of employment for the employee, the travel would be considered to be employment related.
Reasons: 1. Application of Subsection 6(2) and paragraph 11 of Interpretation Bulletin IT-63R.
2. Depending on whether the place where employees are called upon to work in an emergency on evenings and weekends is a regular place of employment. Previous Canada Revenue Agency positions.
XXXXXXXXXX 2010-036143 Lucie Allaire, Advocate, CGA, D. Fisc. July 14, 2010
Dear Sir,
Subject: Use of an automobile supplied by an employer
This is in response to your email of March 18, 2010, in which you asked our opinion on the calculation of the taxable benefit to be included in the income of employees who may use a motor vehicle provided by their employer. You also wish to know the nature of employees' travel between their home and a place where they are called to work in order to respond to an emergency call, in light of additional information provided during telephone exchanges (XXXXXXXX/Allaire).
Unless otherwise indicated, all legislative references herein are to the provisions of the Income Tax Act (the "Act").
You referred to an employer who is a borough of a municipality and who supplies motor vehicles to its employees, who are foremen. You indicated that the motor vehicles supplied are either station wagons or pick-up trucks. In this regard, based on the information you provided, we have assumed that the motor vehicles supplied by the employer meet the definition of automobile in subsection 248(1).
In addition, you specified that the foremen of the four sections, i.e. buildings, roads, parks and garages, regularly perform part of their duties on a daily basis in an office in the public works department. However, the foremen are also called upon during their workday to perform their field work, which covers the entire territory of the borough.
The foremen, on a rotating basis, are on call in the evenings and on weekends to respond to an emergency call, such as a water main break or a snow removal obligation following a snowstorm. Generally, when such an event occurs, the foreman first goes to the public works office to assign different tasks among the employees. Thereafter, they go out into the field to supervise.
Your Questions
You asked whether weekend days should be considered in the calculation of the standby charge for an automobile. In addition, you also wish to know if travel by employees between home and a place of work in response to an emergency call should be considered personal or work-related.
Our Comments
It appears to us that the situation described in your letter and summarized below could constitute an actual situation involving taxpayers. As explained in Information Circular 70-6R5, it is not the practice of this Directorate to provide comments on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involved specific taxpayers and one or more transactions, you should submit all relevant facts and documentation to the appropriate Tax Services Office for its opinion.
However, we are able to offer the following general comments that you may find useful.
The personal use of an automobile, which is provided by the employer, is a taxable benefit to the employee. This benefit is included in the employee's income under paragraph 6(1)(e) as a standby charge. In addition, if the employer pays operating expenses for the personal use of that automobile, an operating expense benefit is also included in the employee's income under paragraph 6(1)(k).
For the purposes of paragraph 6(1)(e), subsection 6(2) provides a formula for calculating the standby charge for an automobile based on the total number of days the employer makes an automobile available to an employee during the period in the year that the employer owned or leased the automobile.
The expression “total number of days … in a taxation year during which the automobile is made available to a taxpayer … by the employer of the taxpayer” and “total available days” in subsection 6(2) refer to the total number of days in the taxation year during which an automobile is made available to an employee by the employer. That total number of days, including weekend days, includes the first day the automobile is made available to the employee and each day thereafter until the employee is required by the employer to return the automobile and surrender control of it to the employer.
In this regard, an automobile is available to an employee if the employee has access to or control of it. The employee ceases to have access to it when the employee hands over all the keys.
Thus, weekend days must be considered in calculating the taxable benefit under paragraph 6(1)(e) and subsection 6(2).
Furthermore, whether or not the motor vehicle is an automobile, where an employer provides an employee with a motor vehicle that is used for transportation between the employee's residence and the employee's regular place of employment, the employee usually receives a taxable benefit. Personal use includes travel between home and work, even if the employer requires the employee to use the vehicle to return home. However, we do not consider use of a motor vehicle to be personal use if the employer requires the employee to travel directly from the employee’s home to a place other than the place of business where the employee regularly reports, or to return home from that place.
The determination of a place as the regular place of employment for an employee is a question of fact that can only be resolved after a review of all relevant information and must be considered from the employee's perspective. Any place to which the employee regularly reports or from which the employee regularly reports or performs the duties of the employee’s employment is considered to be the employee's regular place of employment. In the present situation, we are of the view that the borough's public works office is a regular place of employment for the foremen.
Thus, foremen's travel in response to emergency calls in the evenings and on weekends to get to the public works office would be of a personal nature.
On the other hand, if a foreman goes directly to a particular location that is not the foreman’s regular place of employment, such as a location where a watermain break has occurred or where crews of employees are performing snow removal operations following a snowstorm, the foreman’s travel would be considered employment-related and not of a personal nature.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.