Automobile Benefits, Car Allowances, and Car Expenses

As an employee, the taxpayer is eligible to deduct expenses related to their work responsibilities, given that they do not receive any reimbursements from their employer. It is important to determine whether the taxpayer is driving a motor vehicle, automobile, or passenger vehicle for employment purposes. For example, ITA paragraph 6(1)(b) on allowances refers to a motor vehicle while subsection 6(2) refers to an automobile. When an employer provides an automobile to an employee, the employee receives a taxable benefit. The two primary benefits are: 1) the standby charge - the benefit that the employee receives from having the use of the capital asset (company owned vehicle) without spending their own money on purchasing it; and 2) the automobile operating costs, if any, that are paid by the employer.

Author: Natalie Leung