When employers provide automobiles to employees to help them perform their employment duties, or instead give allowances or expense reimbursements, the tax implications can be remarkably complex.
To help, this booklet provides a general outline and analysis of the relevant tax rules as they stood on February 3, 2016. It also addresses the tax consequences that arise when an automobile is supplied to a shareholder or partner or when a self-employed person uses an automobile for business.
Company automobiles, expense allowances and reimbursements may increase productivity, provide job satisfaction and improve the benefit package — things that both employees and employers care about.
Tax authorities have something else in mind: ensuring that employees do not receive personal benefits tax-free, when salary, bonus and other forms of compensation would give rise to income tax. The result is an intricate set of rules that levy tax on any personal use of an employer-supplied automobile and on some car allowances.
The rules also permit employees to claim certain deductions if they use their own vehicles in performing their employment duties.
Tax law in Canada is complicated and ever-changing, affected by frequent legislative changes, court decisions and the administrative practices of the tax authorities. This booklet is not a substitute for professional advice, which you should seek when you are considering important actions. Nevertheless, it will answer many questions and help you understand the tax implications of employer- and employee-provided automobiles.
Our employee log can be used to record information that supports motor vehicle expenses and taxable benefit calculations. You can download
For assistance with this complex subject, contact your PwC adviser or any of the individuals listed on page 25 of the car tax guide.
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|2016 Car expenses and benefits log — Annual summary (2.21 MB)
Download the Excel sheet.