July 1, 2009

Canadian Construction Association

Some tax relief on employer provided vehicles

Richard Gilbert

staff writer

As a result of lobbying from the Canadian Construction Association, the federal government will allow a reduced benefit calculation on employer provided vehicles.

“This announcement by the minister on June 11 is a bit of a surprise and good news,” said Michael Atkinson, during recent board meetings of the CCA in Calgary.

“However, it falls short of the ultimate goal. The benefit applies only to non-automobiles and doesn’t apply to a king cab. There can only be a driver and two passengers.”

The reduced valuation is 24 cents rather than the current 52 cents.

This benefit can be applied when a vehicle is not an automobile, within the definition of the Income Tax Act.

This means the vehicle is necessary for employment duties and is driven from home to the work site.

The employer must have business reasons for requiring the employee to take the vehicle home at night, such as security concerns with regard to keeping the employers tools and equipment at the worksite or employers premises.

The vehicle should also be designed or suited for the employers business or trade and is essential for performance of employment duties.

The CCA believes this new development is a step in the right direction, but not all that helpful for several reasons.

First, it applies only to non-automobiles, which is defined as a vehicle that has room for a driver and two passengers. So, a truck with an extended super cab is an automobile and would not be eligible for the reduced benefit valuation.

It also does not address a situation where the employee is required to travel greater distances to a worksite than they might otherwise travel to an employer’s place of business.

It is still assessed as a taxable benefit to the employee.

The CCA has hired a government relations consulting firm, specializing in tax matters, to seek legislative reforms that would see the elimination of taxable benefits.

The CCA is focusing its lobbying efforts on Finance Canada rather than the Canada Revenue Agency, since it appears nothing can be advanced on this issue without Finance Canada’s agreement.

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