24(1) Liaison Meeting - November 20, 1990
Question 7
Taxable Benefit on Automobiles
In paragraph 12 of Interpretation Bulletin IT-63R3, Revenue Canada states that where a substantial lease payment is made at the beginning of the lease, a pro-rata portion of this should be added in determining an employee's taxable benefit. Please comment on the meaning of "substantial".
Department's Position
The term substantial, as used in the above example, is not intended, to have a precise technical meaning. Rather, it is intended to be descriptive of situations where one of the purposes of a lease pre-payment is to reduce the amount of standby charge in respect of the vehicle for future years. Normal commercial pre-payments, such as the first and last months rental amounts, are not intended to be covered by this example.
R.B. DayNovember 7, 1990