An employee, who worked for the employer in another role before taking on a new employment assignment in 2020 did not have the use of an employer-provided automobile in such previous employment in 2019 and, due to the COVID-19 pandemic, the employee’s business use of the employer-provided automobile was 20% in 2020, whereas the business use percentage of the previous holder of the position was 80% in 2019 and prior years. Can such prior business usage be used by the current employee to determine that individual’s eligibility for the reduced standby charge in 2020 and 2021?
After noting that an employee must use the employer-provided automobile primarily (i.e., over 50%) in connection with, or in the course of, the employment in order for a reduction under the standby formula in s. 6(2) to be available, and that s. 6(2.3) deems an employee who used an automobile more than 50% of the distance driven for business purposes in 2019 to have done the same in 2020 and 2021, CRA stated:
[S]ubsection 6(2.3) of the Act which explicitly makes reference to the “taxpayer”: “…if the taxpayer met the conditions … for the 2019 taxation year in respect of an automobile…” As such, the business usage of another taxpayer (i.e., the employee who held the employment position in 2019) cannot be used by the current employee to determine their eligibility for the reduced standby charge in 2020 and 2021.
Further, as the current employee did not have use of an employer-provided automobile in 2019, the conditions of subsection 6(2.3) of the Act would not be met (i.e., the employee was not provided with an automobile by the same employer in 2019) … .