Car Expense & Benefit:

When your employers provide automobiles to you (as an employee) to help perform the employment duties, or instead give you allowances or expense reimbursements, the tax implications can easily become very complex.

Company automobiles, expense allowances and reimbursements may increase productivity, provide job satisfaction and improve the benefit package-things that both employees and employers care about.

With automobile expenses revenue agencies want to ensure that you do not receive receive tax free benefit. It is important to keep in mind that there’s a difference between allowance and benefit. The benefit is taxable where as long allowance are reasonable it is not.

Please note, this article is not a substitute for professional advice. For more information call us at 514-585-6848 or visit us at www.paulsandassociates.com

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  1. Generally, the benefit for an automobile for the year is:
    • A stand by charge; plus
    • An operating expense benefit for the year; minus
    • Any reimbursements employees make in the year for benefits you otherwise include in their income for the standby charge or the operating expenses.

    What is standby charge?

    It is applicable when the automobile provided by your employer is available for your personal use. So, if you do not use the automobile for personal use, there is NO taxable benefit even if the automobile is available to you for the entire year. Standby charge is calculated differently depending on whether the vehicle is owned or leased.

    For more details on standby charge, consult PAULS & ASSOCIATES at http://www.paulsandassociates.com or call 514-585-6848.

    Operating Expense Benefit:

    This generally includes: gasoline or oil; maintenance or repair expenses; less insurance proceeds; licences and insurance. However, operating expenses do not include interest, CCA for an automobile you own, lease costs, parking costs, and highway or bridge tools.

    For more details on operating expense benefit, consult PAULS & ASSOCIATES at http://www.paulsandassociates.com or call 514-585-6848.

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