18 December 1989 Income Tax Severed Letter AC32789 - Reasonable Standby Charge for Use of Automobile

3-2789
         19(1)                                    A. Humenuk
                                                  (613) 957-2l35

December 18, 1989

Dear Sirs:

Re:  Request for an Advance Income Tax Ruling
                     19(1)

This is in response to your letter of October 28, 1989, in which
you requested an advance Income tax ruling in respect   24(1)24(1)            Thank you for taking the time to
make your representations to us in person on November 24, 1989.

                              24(1)

You have asked five questions in respect of the requested ruling:

1.        Is the expression in paragraph 6(2)(d) of the Income
          Tax Act (the "ACt"), `in connection with or in the
          course of the office or employment', restricted to
          merely the action of driving from one business location
          to a second business location and from a personal
          residence to a business location other than the usual
          place of work?

2.        Does the activity of engaging in telephone
          conversations of a strictly employment nature
          constitute an activity that is `in connection with or
          in the course of the office or employment' if such
          activity would otherwise have to be conducted sometime
          later at a stationary telephone location by the
          employee as a duty of his employment?

3.        If a telephone conversation of an employment nature
          does constitute an activity that is `in connection with
          or in the course of the office or employment', then,
          can the travel between a personal residence and the
          usual work location be considered not to be of a
          personal nature if such telephone conversations are
          being conducted during that period of travel?

4.        Can the measurement of the expression in paragraph
          6(2)(d) of the Act `distance travelled by the
          automobile in the total available days! be measured
          based on time spent engaging in telephone conversations
          of an employment nature relative to the total time
          spent in the travel between a personal residence and
          the usual work establishment?

5.        If the measurement of the expression `distance
          travelled by the automobile in the total available
          days' can be based on the time expiration approach as
          stated in 4 above, does the 90% rule as defined in
           IT-63R3
 in respect of the expression `all or
          substantially all' pursuant to paragraph 6(2)(d) of the
          Act apply to this approach and to the travel between a
          personal residence and the usual work establishment?

As stated in paragraph 14 of Information Circular 70-6R "Advance Income Tax Rulings" (copy of which is attached) we are unable to provide a ruling in a situation where the determination requested is primarily one of fact, and the circumstances are such that all the pertinent facts cannot be established at the time of the request. We would however, like to offer the following comments on the issues you have raised.

1.        The phrase "in connection with or in the course of the
          office or employment", as used in paragraph (d) of the
          calculation of "A" of the formula contained in
          subsection 6(2) of the Act, refers to the distance
          travelled by the automobile.  Paragraph 5 of  IT-63R3
          outlines the Department's position on what type of
          travel is considered personal.  Distance travelled
          which is not personal in nature (in relation to the
          employer's business) is considered to be in connection
          with or in the course of employment; other distance
          travelled is not.

2&3.      While the activity of engaging in an employment-related
          telephone call on a mobile phone may constitute an
          activity that is in connection with employment, it does
          not follow that the distance travelled by the
          automobile while the driver is so engaged is also in
          connection with or in the course of employment.

4&5.      Based on our response to question 3, responses to
          questions 4 and 5 would not appear to be required.

In summary, it is our position that personal travel as described in paragraph 5 of IT-63R3 cannot be converted to travel `in connection with or in the course of employment' by the concurrent use of a mobile phone for employment purposes.

We trust this will be of assistance to you.

Your deposit will be returned under separate cover.

Yours truly,

for Director Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch

Enclosure

c.c. Montreal District Office Shawinigan Taxation Centre Assessing and Enquiries Directorate Source Deductions Division