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Businesses . . . Taxes . . . Automobile . . .Personal use of a business vehicleIf the employer supplies a vehicle for the employee's use, and the employee has access to the vehicle for personal use as well, the employee will be assessed a taxable benefit in two parts. The easiest part of the benefit is called the Operating Cost Benefit. This benefit is assessed if the employer pays costs related to operating the vehicle (i.e. gas, oil, insurance, maintenance, etc). This benefit is calculated by charging $0.20 (for 2005) for every personal kilometre the vehicle is used. The second component is called the Stand-by Charge. It is calculated as 2% of the cost of the vehicle per month the employee has access to the vehicle. If the vehicle is leased, the Standby Charge is calculated as 2/3 of the monthly lease cost for each month the employee has access to it.
Reduction of Standby Charge The reduced standby charge applies to the extent annual personal driving does not exceed 20,000 kilometres, and the automobile is used primarily - that is, more than 50 per cent - for business purposes. The reduced standby charge is Regular Standby Charge X Personal Kilometres Driven 20,000 km
For example, where a vehicle is driven 25,000 kilometres a year for business and 15,000 kilometres a year for commuting and other personal driving, the standby charge will be 75 per cent (15,000 divided by 20,000) of the regular standby charge.
Using the above example, with a vehicle costing $30,000, the standby charge would be as follows:
$30,000 x 2% x 12 months x 75% = $5,400
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