TaxTips.ca
Canadian Tax and
Financial Information
Automobile Operating Cost Benefit

Ads keep this website free for you.
TaxTips.ca does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Looking for US tax information?
See
USTaxTips.net

Need an accounting, tax or financial advisor? Look in our Directory.      Stay Connected with TaxTips.ca!

Home
What's New
Calculators
Personal Tax
Business
Sales Taxes
Free in 30!
Financial Planning
RRSP RRIF TFSA
Real Estate
Stocks Bonds etc.
Seniors
Disabilities
Canada
Alberta
British Columbia
Manitoba
Ontario
Quebec
Saskatchewan
Atlantic Provinces
Territories
Federal Budget
Provincial Budgets
Statistics etc.
Glossary
Site Map
Directory
Advertise With Us
Contact Us/About Us
Links & Resources



Business   ->   Automobiles, Passenger Vehicles and Motor Vehicles   ->   Automobile Taxable Benefits  -> Operating Cost Benefit

Automobile Operating Cost Benefit

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

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:

Years Rate per
km
2017 $0.25
2016 $0.26
2013-2015 $0.27
2012 $0.26
2008-2011 $0.24
2006/2007 $0.22
2005 $0.20
2004 $0.17

Operating Cost Benefit Reduction

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, less any reimbursements.

Operating Cost Benefit Example

# of months available for use

12

Total kilometres driven

35,000

Personal kilometres driven (40% of total)

14,000

Using the standby charge example, the operating cost benefit for 2013 would be:
        14,000 km x $0.27 per km = $3,780

The automobile was used more than 50% for business purposes, so the alternate calculation available, based on a calculated standby charge of $4,199, is:
        $4,199 x 50% = $2,099.50

Thus, the total taxable benefit to the employee in this example is:
        $4,199 standby charge + $2,099.50 operating cost = $6,298.50

Other Resources:

All topics related to vehicles and business

Automobile Sales People

Tax Tip:  If your personal use is less than 50%, make sure your employer is aware that the operating cost benefit should be reduced.

Revised: September 19, 2017

Copyright © 2002 - 2017 Boat Harbour Investments Ltd. All Rights Reserved  See Reproduction of information from TaxTips.ca

Facebook  | Twitter  |  Google + |  Monthly Newsletter Sign-up  What’s New E-mail Notification RSS News Feed
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.