Car Expenses and Benefits

February 2023

A Tax Guide (2023)

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, 2023. 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:

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

Important download instructions for files

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

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

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

Contact us

Sabrina Fitzgerald

Sabrina Fitzgerald

National Leader for Private Clients, PwC Canada

Tel: +1 613 898 2113

Luigi De Rose

Luigi De Rose

Partner, Private Tax, PwC Canada

Tel: +1 905 418 3421

Jean-François Thuot

Jean-François Thuot

Partner, PwC Canada

Tel: +1 514 205 5272

Rajen Shah

Rajen Shah

Partner, PwC Canada

Tel: +1 403 561 9608

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Dean Landry

Dean Landry

National Tax Leader, PwC Canada

Tel: +1 416 815 5090

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