Oct 24, 1988
A. Humenuk (613) 957-2135 Dear Sirs:
Re: Automobile Standby Charge Paragraph 6(1)(e) of the Income Tax Act
We are responding to your letter dated August 10, 1988, wherein you requested our interpretation of paragraph 6(1)(e) of the Income Tax Act (the "Act") as it applies to the situation described in your letter.
It is our view that an automobile is made available to an employee whenever the vehicle is in his custody (i.e. he has possession of the keys rather than his employer) notwithstanding the fact that the vehicle may be left at the airport or at the employer's place of business. It should be noted that the standby charge not only arises from the availability of the automobile but is also dependent on the personal use of the vehicle. Where the personal use is less than 1,000 kilometers per month and all or substantially all of the distance travelled by the automobile is for business purposes as suggested by examples "a", "c" and "d" referred to in your letter, the standby charge benefit may either be eliminated or reduced to a nominal amount.
It is a question of fact as to whether any particular trip is for personal or business use but the courts have firmly maintained that the travel between home and an employer's place of business is considered personal use. The Department allows an exception to this view where the employer requires or allows the employee to proceed directly from home to a point of call other than the employer's place of business to which the employee reports regularly or to return home from such a point as may be the case in example "a". In example "b" it would appear that the travel associated with getting to the airport for the vacation is clearly personal. Depending on the percentage of business use and the total number of kilometers driven for personal use while the vehicle was in the employee's custody, a reduction of the standby charge may still be available as described on form TD5 "Application for reduction of the Automobile standby charge and/or Notification of Operating Cost Benefit Option."
In summary, paragraph 6(1)(e) of the Act applies to any period in which an employee has custody of his employer's automobile but subsection 6(2) of the Act may reduce the standby charge benefit where there is little or no actual personal use in respect of that vehicle.
Yours truly,
ORIGINAL SIGNED BY ORIGINAL SIGNED PAR
P. D. Fuoco
for Director Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch Small Business & General Division