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Automobile Standby Charge Benefit

See below re temporary change for 2020/2021.

Income Tax Act s. 6(1)(e), s. 6(2)

The standby charge benefit recognizes that the employee is receiving a benefit by having the automobile available to them during the year for their personal use.

The standby charge is calculated based on:

	the original cost of a purchased automobile or the monthly lease cost of a leased automobile (including GST or HST and PST if applicable), and
	the number of months the automobile is available to the employee for personal use (which normally includes driving to and from work), and
	the number of kilometres driven for both personal and business purposes, and
	any reimbursement by the employee for the availability of the vehicle.

When the automobile is owned by the employer, the standby charge is:
2% x cost of automobile x # of months available to the employee in the year

If the automobile is available 12 months of the year, then 24% of the cost of the automobile is included in the employee's income each year.

When the automobile is leased by the employer, the standby charge is:
2/3 x monthly lease costs (excluding insurance) x # of months available to the employee in the year.

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

Standby Charge Reduction

For 2003 and later years, the standby charge may be reduced if:

	the kilometres driven for business use are at least 50% (90% prior to 2003) of the total kilometres driven, and
	less than 20,004 km per year, or an average of 1,667 km per month (1,000 km per month previously), are driven for personal use.

Example of reduced standby charge calculation for a company-owned vehicle:

Reduced Standby Charge Example for Company-Owned Vehicle
Cost of vehicle including taxes	$25,000
# of months available for use	12
Total kilometres driven	35,000
Personal kilometres driven (40% of total, avg 1,667 km per month)	14,000
Standby charge = $25,000 x 2% x 12 months x 14,000/20,004 = $4,199.16
If the personal use had been 50% or more, then the benefit would be: $25,000 x 2% x 12 months = $6,000

The above example assumes no reimbursement has been made by the employee to the employer. When business use is 50% or greater, the operating cost benefit can be reduced to 50% of the standby charge, if the employee files written notice electing to use the alternative method of calculating the operating expenses benefit.

The above rates are still in effect up to 2024.

Tax Tip: If the alternative method would benefit you, file a written election with your employer to use it!

Temporary Standby Charge 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 access the reduced 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.

TaxTips.ca Resources

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Canada Revenue Agency (CRA) Resources

See the main Auto Taxable Benefits article for CRA resources.

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

Revised: December 19, 2023