Principal Issues: In a given situation, is the parking lot provided by the employer a taxable benefit?
Position: Yes, parking lot offered to facilitate working irregular or prolonged hours is not a parking used for business purposes.
Reasons: Long-standing position.
XXXXXXXXXX 2016-064591
I. Landry, M. Fisc.
January 24,2018
XXXXXXXXXX,
Subject: Taxable Benefit – Parking
This technical interpretation provides general comments on the provisions of the Act. It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R7, Advance Income Tax Rulings and Technical Interpretations.
Briefly, an employee usually receives a taxable benefit under paragraph 6(1)(a) when the employer provides the employee with free parking at one of the employer’s establishments.
As stated on our website at: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/tmbl/prkng-eng.html, there is no taxable benefit for an employee when both of the following conditions are met:
- The employer provides parking to its employee for business purposes.
- The employee regularly has to use his or her own automobile or one the employer usually supplies to do his or her duties.
Concerning the concept of parking provided to an employee for business purposes, we indicated on our site at the following address: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/ bnfts / tmbl / prkng / dfntns-eng ... we do not consider that parking offered to facilitate working irregular or extended hours is parking for business purposes.
The employer must establish the value of the benefit according to the circumstances of each case. The value of the benefit is the price the employee would have to pay in similar circumstances to obtain the same benefit from a person who is not his or her employer.
For parking, the benefit amount is usually based on the fair market value ("FMV") of parking, less any amount the employee pays to use it. In general, the FMV of a parking space is the price that could be reasonably charged for the use of that space in an open and unrestricted market (i.e., the market price for a similar space in the surrounding area having the same conditions of use as for the space provided by the employer).
Michel Lambert, CPA, CA, M. Fisc.
Manager
Employment Income Section
Business and Employment Income Division
Income Tax Rulings Directorate
Legislative Policy and
Regulatory Affairs Branch