31 July 2019 External T.I. 2019-0798361E5 - Business use of vehicles – maintenance employees

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 maintenance employees travel would be considered personal in various circumstances.

Position: Question of fact.

Reasons: Law and CRA administrative policies.

XXXXXXXXXX				2019-079836
					Sarah Springate
July 31, 2019

Dear XXXXXXXXXX:

Re: Business use of vehicles – maintenance employees

We are writing in response to your correspondence of February 27, 2019 and our (Springate/XXXXXXXXXX) subsequent telephone conversation of June 3, 2019, in which you requested clarification as to whether the travel of certain maintenance employees in employer provided motor vehicles (the Vehicles) would be considered personal in certain circumstances.

According to your letter XXXXXXXXXX manages over XXXXXXXXXX housing units located in XXXXXXXXXX. XXXXXXXXXX maintenance staff (Staff) work rotating standby shifts to service buildings as issues arise. During standby shifts, Staff must be available to report to a call. The Staff may receive several call outs during a standby shift and are expected to return home during any down time to wait for their next call. Staff are supplied with Vehicles which generally must be taken home with them when they are scheduled to work a standby shift. Occasionally, more than one Staff member is required to service a unit. In this case Staff may choose to carpool to the location.

You have also indicated that several of XXXXXXXXXX’s multi-unit buildings have live in Staff members. While these Staff mainly service the location where they reside, they are occasionally required to service other XXXXXXXXXX locations throughout the city. Live in Staff generally drive a Vehicle stationed at their building when traveling to another worksite.

Additionally, you have indicated that the Vehicles are used to carry tools, equipment, materials and inventory used by Staff in the performance of their employment duties and can seat no more than the driver and two passengers. We will assume that in all circumstances considered, the Vehicles provided to Staff do not meet the definition of an “automobile” under subsection 248(1) of the Income Tax Act (Act).

Our Comments

This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R9, Advance Income Tax Rulings and Technical Interpretations.

A taxable benefit arises when an employee uses an employer’s motor vehicle for personal purposes. It is the Canada Revenue Agency’s (CRA) long-standing position that travel between an employee’s home and a regular place of employment (RPE) is generally considered personal travel, notwithstanding that the employee may be required to bring a vehicle home at night.

A RPE is any location where an employee regularly reports for work or performs the duties of employment. In this case, “regular” means there is some degree of frequency or repetition in the employee's reporting to that particular location in a given pay period, month, or year. This “place” does not have to be an establishment of the employer and may include a client’s premises. For example, a work location may be considered to be a RPE of an employee even though the employee may only report to work at that particular location on a periodic basis (e.g., once or twice a month) during the year. Depending on the circumstances, an employee may have more than one RPE. Multiple RPEs may occur where an employee is required to report to more than one work location to perform the duties of his or her employment.

Exceptions to the above rule include where an employer requires or allows an employee to proceed directly from home to a point of call or to return home from a point of call, or travel between two RPEs. In these circumstances, such travel is considered employment travel. A point of call is a place the employee goes to perform their employment duties other than the employee’s RPE.

Where the employer provided motor vehicle in question does not meet the definition of an “automobile” as defined in subsection 248(1) of the Act, a taxable benefit will apply for any personal use under paragraph 6(1)(a) of the Act. Generally, the amount of the employment benefit is based on a reasonable estimate of the fair market value of the benefit, including GST/HST, derived by the employee.

Limited circumstances exist where a benefit received from an employer may not be caught by paragraph 6(1)(a). Such circumstances include where an employee is not enriched by a benefit, where the employer is the main recipient of the benefit, and where the benefit is received in one’s capacity as an individual as opposed to being received in ones capacity as an employee.

Regular place of employment

In the circumstances described, Staff may be required to visit a large number of housing units throughout the city in a given year. Whether travel between Staff’s home and a particular location is personal will generally depend on whether the location is a RPE. Whether an employee regularly reports for work or performs the duties of employment at a particular location is a question of fact requiring a review of all the relevant facts of each case. In determining whether any location visited by a Staff could be a RPE, consideration should be given as to how often a particular townhouse complex or apartment building is visited, and not any individual unit located within the townhouse complex or apartment building. For greater certainty, and for purposes of determining whether any particular location may be considered a RPE, we would generally consider an entire townhouse complex or apartment building to be one location.

Adequate records should be maintained to evidence which Staff are dispatched to which XXXXXXXXXX locations during the year. For further information on keeping records, please refer to Chapter 2 – Automobile and motor vehicle benefits and allowances of the CRA’s Guide T4130, Employers’ Guide Taxable Benefits and Allowances.

Travel during standby shifts

In the absence of evidence to the contrary, the payment of a personal expense of an employee is considered to benefit the employee first and foremost. However, depending on the facts of each case, it may be possible to establish that an employer is the primary beneficiary of a personal expense.

Based on our understanding of the circumstances described, it appears that the primary reason for employees returning home in between calls during a standby shift is due to XXXXXXXXXX’s policy of not paying Staff for down time. Staff, however, must remain available to XXXXXXXXXX during this downtime and may be redirected to another call out at any time during a standby shift. In this case it is likely that the employer is the primary beneficiary of an employee’s travel to and from home in between the first and last call out of a standby shift. As such, no taxable benefit should result from this travel.

Carpooling

Travel between home and a RPE would generally be considered personal in a carpooling scenario. Typically, we would not consider travelling to a colleague’s house as part of a carpool arrangement to be travel to a point of call. In cases where such travel may include both a personal element and an employment element, we consider the primary purpose of a particular trip in determining whether it is personal in nature or employment-related. The primary purpose of any trip is always a question of fact.

The passenger in a carpool arrangement would generally be in receipt of an economic advantage. In determining whether such a benefit may be taxable under paragraph 6(1)(a), it is necessary to determine whether there is a connection between the benefit and the passenger’s employment. In the circumstances described, Staff members occasionally carpool between their respective homes and a work location in a Vehicle. Carpooling appears to be replacing the passenger’s travel between home and work in their own employer assigned Vehicle. Additionally, carpooling is only possible where the Staff members are assigned to the same worksite and shift, and where the passenger can either use tools that are already in the driver’s Vehicle, or where that Vehicle can accommodate additional tools that the passenger requires for work. In such circumstances, it is our view that there is a connection between carpooling and the passenger’s employment and therefore, the passenger would be in receipt of a taxable benefit with respect to employer provided travel. However, no benefit will arise if the worksite is not a RPE.

The value of an employer provided travel benefit should be based on the fair market value of the benefit received minus any payment that the employee makes. The calculation of the fair market value of a benefit received is a question of fact that should take into account all circumstances of the particular situation. In a carpool scenario, a reduction in the value of the travel benefit may be warranted based on loss of privacy or quiet enjoyment, additional travel time, etc. The reduction has to reasonably relate to the degree of disturbance or inconvenience that affects the employee. There is no specific calculation or method to reduce the benefit since it comes down to a question fact. It is an employer’s responsibility to determine the taxable benefit being received by an employee. Employees and employers should keep records on employee travel in support of the particular position taken.

Travel of live in employees

It is the CRA’s longstanding position that travel between an employee’s home office to another RPE is personal. However, notwithstanding the fact that travel between an employee’s home and their place of work is generally personal in nature, to the extent that the location of the employee’s residence is also a place of business (as defined in IT-522, Vehicle, Travel and Sales Expenses of Employees) of their employer, travel from such a location to another RPE would not be of a personal nature. As such, no taxable benefit would result from this travel.

We trust that these comments will be of assistance to you.

Sandro D’Angelo, CPA, CMA
Acting Manager
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch