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Automobile Operating Cost Benefit - Employer-Owned Vehicle

Income Tax Act s. 6(1)(k), Income Tax Regulations s 7305.1

Automobile Sales People - rates for people who are employed principally in selling or leasing automobiles

Operating Cost Benefit Per KM

Operating Cost Benefit Reduction - Alternative Operating Expenses Benefit

Operating Cost Benefit Example

Temporary Operating Cost Benefit Adjustment for 2020 and 2021 re COVID-19

TaxTips.ca Resources

Canada Revenue Agency (CRA) Resources

Operating Cost Benefit Per KM

If the employer has paid the operating costs of an automobile which has been available for the personal use of an employee,  an operating cost benefit must be included in the employee's income, less any reimbursements by the employee to the employer.  The operating cost benefit is based on the kilometres of personal use by the employee, at the following rates per kilometre:

Operating Cost Benefit Reduction - Alternative Operating Expenses Benefit

For 2003 and later years, if the employee uses the automobile primarily (at least 50%) for business purposes, the operating cost benefit may be calculated as 50% of the standby charge (if the employee so elects, in writing), less any reimbursements.

Operating Cost Benefit Example

The operating cost benefit for 2023 or 2024 for the above would be:
        14,000 km x $0.33 per km = $4,620.

Using the standby charge example where the automobile was used more than 50% for business purposes, the alternative operating expenses benefit calculation available, based on a calculated standby charge of $4,199.16, is:
        $4,199.16 x 50% = $2,099.58

Thus, the total taxable benefit to the employee in this example is:
        $4,199.16 standby charge + $2,099.58 operating cost = $6,298.74.

Automobile benefits can be calculated using CRA's Automobile Benefits Online Calculator, or by using Form RC18, Calculating Automobile Benefits.

Tax Tip:  Written notice must be filed with your employer to use the alternative method of calculating the operating expenses benefit!

Temporary Operating Cost Benefit Adjustment for 2020 and 2021 re COVID-19

Employees will be allowed to use their 2019 automobile usage to determine whether they use the automobile primarily for business purposes, in order to calculate the operating expense benefit as 50% of the standby charge in 2020 and 2021.  Only employees with an automobile provided by the same employer as in 2019 are eligible for this option.

Dec 21, 2020 Backgrounder: Temporary Adjustments to the Automobile Standby Charge for the 2020 and 2021 Taxation Years due to COVID-19

This measure is included in Bill C-30, Budget Implementation Act, 2021, No. 1, tabled April 30, 2021.

See also Temporary Standby Charge Adjustment for 2020 and 2021 re COVID-19.

TaxTips.ca Resources

All topics related to vehicles and business

Automobile Sales People

Canada Revenue Agency (CRA) Resources

See the main Auto Taxable Benefits article for CRA resources.

Revised: December 19, 2023