Principal Issues: In light of the MacMillan case, does a taxable benefit apply to employees who are required to take employer motor vehicles home to be available to respond to emergencies?
Position: Yes.
Reasons: An employee who uses an employer-provided motor vehicle to travel between home and work, without paying for the use, has received a benefit notwithstanding the conditions of employment that require the employee to take the vehicle home.
XXXXXXXXXX 2005-016261 Kathryn McCarthy, CA May 18, 2006
Dear XXXXXXXXXX,
Re: Motor Vehicle Taxable Benefit
We are writing in response to your letter of December 6, 2005, concerning the above-noted issue.
The XXXXXXXXXX has employees who are required to take employer motor vehicles home (including tools), in order to be available in case of emergency. These vehicles are to be used only for travel between home and work. XXXXXXXXXX has recorded a taxable benefit for the employees who take the motor vehicles home. In light of the Tax Court of Canada (TCC) decision in James MacMillan v. the Queen (2005 DTC 1243), you enquired whether there is a taxable benefit under the Income Tax Act (the Act) for these employees.
Our Comments
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to offer the following comments.
The CRA's general view is that an employee who uses an employer-provided motor vehicle to travel between home and work, without paying for the use, has received a benefit notwithstanding the conditions of employment that require the employee to take the vehicle home. We recognize that there are a number of informal TCC decisions, including the MacMillan case, that have held otherwise in certain situations. Those decisions are informal and very fact specific and therefore, we have not adopted any change in our view. We are, however, currently reviewing our general position on what constitutes personal travel. Until that review is complete and there are changes, if any, in our general view, your method of accounting for the travel as personal for employment benefit purposes is correct.
We trust our comments will be of assistance to you.
Yours truly,
Randy Hewlett
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch