An employer was required to withhold pursuant to s. 153(1) on fixed automobile allowance paid monthly even though, at the end of the year, it included in the T4 for the affected employee, the amount by which this total allowance exceeded the amount that the employee should have received based on the kilometres driven for business purposes. The sums paid could not constitute advances, as the employees were not obligated to repay the excess over the business kilometerage to the employer.
The allowance was not paid solely on the basis of the number of kilometres travelled, so that the allowance was deemed by s. 6(1)(b)(x) to be unreasonable, and was required to be included as employment income. However, the employees may apply to CCRA to have the payroll deductions reduced or eliminated based inter alia on the estimated automobile expenses for the year.