Have the CRA auditors been directed to consistently treat motor vehicle allowances exceeding the Reg. 7306 limits as unreasonable for s. 6(1)(b) purposes?
Is a motor vehicle allowance considered to be reasonable if it satisfies the amounts set by the Treasury Board of Canada Secretariat (“TBCS”) to be reasonable, if all other ITA requirements are met?
CRA responded:
No direction has been given to CRA auditors that allowances for the use of a motor vehicle exceeding the limits set out in ITR section 7306 will be systematically considered unreasonable for the purposes of ITA paragraph 6(1)(b).
[T]he limits in section 7306 are only a guide to determining the reasonableness of an allowance for the purposes of paragraph 6(1)(b). Depending on the particular circumstances of each situation, a rate that differs from that provided for in that section could therefore be considered reasonable. In addition, the CRA is of the view that the amounts that the TBCS sets as a travel allowance are reasonable amounts for the purposes of paragraph 6(1)(b).