Car expenses and benefits

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A tax guide (2014)

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 January 31, 2014. 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.

Employee log
Our employee log can be used to record information that supports motor vehicle expenses and taxable benefit calculations. You can download

  • A log that can be printed and used track business and personal driving: Car expenses and benefits (Car expenses and benefits — A tax guide (2013): Employee log)
  • An electronic log to track business and personal driving: Car expenses and benefits Log — Annual Summary (2013 Car expenses and benefits log — Annual summary)

For help
For assistance with this complex subject, contact your PwC adviser or any of the individuals listed on page 25 of the car tax guide.

Important downloading instructions for files
For optimal viewing and to enable the hyperlinks used in the two documents, the files must be saved in the same folder on your computer.

To download the PDF files to your computer, click and hold the 'right' mouse button on the link above and select "Save Link As..." or "Save Target As...".

Car expenses and benefits: A tax guide (410 KB)
Download the full PDF Tax Guide.

Car expenses and benefits — A tax guide (2014): Employee log (63 KB)
Download the full PDF log.

Depending on the software you are using, when opening or saving this spreadsheet you might encounter warnings about "unreadable content" or "significant loss of functionality." You can safely ignore these and proceed.

2014 Car expenses and benefits log — Annual summary (2.21 MB)
Download the Excel sheet.