Principal Issues: [TaxInterpretations translation] Section 7306 of the Regulations provides for the calculation of the maximum deduction for allowances paid by an employer to its employees. The amount for the use of an automobile by an employee in a taxation year depends, inter alia, on the number of kilometres driven in the year by the employee. Does this refer to the employee's taxation year, i.e. the calendar year, or to the employer's taxation year?
Position: Calendar year.
Reasons: Interpretation of the Act.
March 29, 2005
Ms. Line Beaudoin Headquarters Sherbrooke Tax Services Office Danielle Bouffard (613) 590-2155
2005-011140
Section 7306 of the Income Tax Regulations
This is in response to your email of January 14, 2005 in which you asked for our opinion on the above subject.
Section 7306 of the Income Tax Regulations (the "Regulations") reads as follows:
For the purposes of paragraph 18(1)(r) of the Act, the amount in respect of the use of one or more automobiles in a taxation year by an individual for kilometres driven in the year for the purpose of earning income of the individual is …
Do the terms "taxation year" and "in the year" refer to the individual's taxation year, i.e., a calendar year, or to the taxation year of the taxpayer who pays an amount to the individual as an automobile standby charge?
Our Comments
As you know, the term "taxation year" is defined in subsection 249(1) of the Act as being, in the case of an individual, a calendar year and in the case of a corporation, a fiscal period.
For the purposes of section 7306 of the Regulations, we are of the view that the terms "taxation year" and "in the year" refer to a calendar year since an allowance is calculated for an individual's use of one or more automobiles.
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, the electronic library version can be provided. Alternatively, the client may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Ms. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
We hope you find these comments of assistance. Should you require any additional information regarding the content of this document, please do not hesitate to contact us.
Ghislaine Landry, CGA
Manager
Individuals, Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate