20 January 2005 External T.I. 2004-0107081E5 - Clearly Marked Emergency-Response Vehicles

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.

Principal Issues: Whether a taxable benefit results in respect of the personal use of an employer-provided motor vehicle that is not considered an automobile because it is a clearly marked emergency-response vehicle by virtue of paragraph (b.1) of the definition of automobile in subsection 248(1) of the Act?

Position: Yes.

Reasons: Notwithstanding the fact that such an employer-provided motor vehicle may not be an automobile, a benefit in respect of the personal use of such vehicle will result in a taxable benefit that must be included in the employee's income under paragraph 6(1)(a) of the Act.

XXXXXXXXXX Randy Hewlett, B.Comm.

613-941-7239
2004-010708
January 20, 2005

Dear XXXXXXXXXX:

Re: Clearly Marked Emergency-Response Vehicles

We are writing in response to your letter of December 1, 2004, wherein you inquired whether a Constable who is appointed under the Police Act (Alberta) is in receipt of a taxable benefit in respect of the use of a clearly marked emergency-response vehicle to travel between his or her home and work.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following general comments.

When an employer makes a motor vehicle available for an employee's personal use, it generally gives rise to a taxable benefit that must be included in the employee's income. In this regard, use of an employer-provided motor vehicle by an employee to travel between his or her home and work is considered personal. At the outset, we emphasise that an employee will be in receipt of a taxable benefit for the personal use of an employer-provided motor vehicle regardless of whether or not the vehicle is considered an "automobile" as defined in section 248(1) of the Income Tax Act (the "Act"). The classification of a motor vehicle as an automobile in this respect will only impact the provision of the Act that calculates the taxable benefit.

The taxable benefit for the personal use and availability of a motor vehicle that is considered an automobile is included in the employee's income under paragraph 6(1)(e) of the Act as a "standby charge", and will depend upon factors such as whether the automobile is available for the employee's use and its personal versus business use. Where the employer pays any of the operating costs of the automobile, an "operating cost benefit" is also included in the employee's income under paragraph 6(1)(k) of the Act. The taxable benefit for the personal use of a motor vehicle that is not an automobile is included in the employee's income under paragraph 6(1)(a) of the Act. The amount of the benefit is based on a reasonable calculation of the value of the benefit derived by the employee, which can vary in differing circumstances depending upon such factors as personal use.

In terms of your specific inquiry, a clearly marked emergency-response vehicle that is used in connection with or in the course of an individual's office or employment with a fire department or the police is not an automobile by virtue of paragraph (b.1) of the definition of automobile in subsection 248(1) of the Act. However, as noted above, if a taxable benefit still results in respect of the personal use of such a motor vehicle, it must be included in the employee's income under paragraph 6(1)(a) of the Act.

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch