8 March 2000 External T.I. 2000-0004225 - STANDBY CHARGE BENEFIT

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: . Is the standby charge applicable where the employer's vehicle is available to the employee but the employer's policy is to forbid the use of the vehicle for personal use other than driving to and from work?

Position: Yes.

Reasons: In general terms, an automobile is considered to have been made available to an employee until such time as the employee is required by the employer to relinquish control over the vehicle back to the employer. A personal use policy in which the employer prohibits personal usage of the vehicle, other than driving to and from work, does not constitute making the automobile unavailable to the employee.

See 9920568, 9905088, 9822755, 9916355, 9918145, 9722576.

XXXXXXXXXX 2000-000422
G. Moore
March 8, 2000

Dear XXXXXXXXXX:

Re: Standby Charge Benefit

This is in reply to your letter of January 18, 2000, regarding standby charges.

In your letter, you indicate that you are taxed on a standby charge benefit as your employer, XXXXXXXXXX, has asked that employees take their vehicles home for security reasons. However, your employer has adopted a policy whereby the vehicles that are provided to individuals are not to be used for personal purposes other than to drive to and from work. It is your view that such a policy effectively makes a vehicle unavailable to an employee during the periods when he or she is not performing employment duties.

Our Comments

The Canada Customs and Revenue Agency's various positions concerning the application of the standby charge provisions are set out in Interpretation Bulletin IT- 63R5, Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer - after 1992, (copy enclosed). Paragraph 11 of the bulletin contains the formula for the calculation of the standby charge and goes on to explain the meaning of the phrase "total available days", as that phrase is used in the formula. In general terms, an automobile is considered to have been made available to an employee until such time as the employee is required by the employer to relinquish control over the vehicle back to the employer. A personal use policy such as the one you described which prohibits personal usage of the vehicle, other than driving to and from work, does not constitute making the automobile unavailable to the employee.

We would point out, however, that in cases where the personal usage is restricted to the drive to and from work, there is an increased likelihood that the total personal kilometrage will be sufficiently low as to entitle the employee to a reduced standby charge. Such a calculation is illustrated in Example II of the bulletin.

We trust our comments will be of assistance.

Yours truly,

J. Wilson
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch

Encl:

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