Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Institute of Chartered Accountants
of Alberta
Roundtable Questions
Question No. 1
Lease Costs for Standby Charge Purposes
Examples of the types of expenses which Revenue Canada considers to be part of the lease costs which form the base of the amount used to calculate the standby portion of an automobile taxable benefit are listed in paragraph 12 of IT-63R4 (Benefits, Including Standby Charges for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer). Example (b) in that paragraph reads "any charges for repairs and maintenance", and the paragraph also specifies that this applies when the employer is required to pay those amounts to the lessor. Essentially the same point is made at the bottom of page 1-2 of booklet T4130(E), "Employers' Guide to Payroll Deductions - Taxable Benefits and Non-Resident Information", in the section headed "Leasing Costs". That section uses slightly different wording, referring to "maintenance contract" payments to the lessor.
With respect to the above facts:
a)Does Revenue Canada agree that the inclusion of repairs and maintenance expenses in the leasing amount used to calculate the standby charge in the circumstances described above represents double taxation for the employees so affected, since the benefits those employees enjoy by having their employer pay for such repairs and maintenance costs forms part of the recently standardized operating cost benefit of $0.12 per personal kilometre?
b)If Revenue Canada's answer to question (a) above is "No", on what basis does Revenue Canada justify the inclusion of repairs and maintenance costs in their definition of automobile lease costs when they are run through the lessor, and not when the employer pays them directly?
c)If the answer to question (a) above is "Yes", will Revenue Canada amend the wording of their next update s of IT-63 and booklet T4130 accordingly?
DEPARTMENT'S POSITION
The Department recognizes that there may be some apparent inconsistencies in the way that paragraphs 6(1)(e) and (k) operate under the circumstances described in the question and we have brought this matter to the attention of the Department of Finance.
J. Szeszycki
May 4, 1995