26 June 1995 External T.I. 9504115 - AUTOMOBILE STANDBY CHARGE

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:

	Whether an employer policy whereby employees provided 	with company automobiles are prohibited from using them 	for personal reasons other than to drive to and from 	work, can justify a reduction in the number of available 	days for the purposes of the standby charge calculation.

Position TAKEN:

No.

Reasons FOR POSITION TAKEN:

	The automobile is considered to have been made available 	to the employee until such time as the vehicle and 	control over its use has been returned to the employer.

		950411
XXXXXXXXXX	J.A. Szeszycki

Attention: XXXXXXXXXX

June 26, 1995

Dear Sirs:

Re: Automobile Standby Charge

This is in reply to your letter of February 6, 1995 in which you requested a technical interpretation of the standby charge provision in the Income Tax Act as it may apply to certain employees of the XXXXXXXXXX. We regret the delay in providing you with this response.

You have indicated in your letter that certain employees of the District, namely, the Public Works Foreman, the Director of Operations, the Fire Chief and the Bylaw Enforcement Officer, are provided with a vehicle by the District. The Council for the District has adopted a policy whereby the vehicles that are provided to these 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.

The Department's various positions concerning the application of the standby charge provisions are set out in Interpretation Bulletin IT-63R4, a copy of which is being provided for your convenience. Paragraph 15 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 within 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 you described which prohibits personal usage of the vehicle, other than for 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 on page 13 of the bulletin.

We hope that our comments will clarify the Department's position on this issue.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch