University of Saskatchewan

Financial Services Division (FSD)

Guidelines & Procedures

Vehicle Use Facts Use of employer owned/leased vehicle

1.  Introduction

All employees that use a University owned/leased vehicle, including a CVA vehicle, for personal use will be assessed a taxable benefit.

Refer to section 3.1 and 3.2 of this document for the taxable benefit calculation. The following factors impact on the calculation of the benefit:

It is important that detailed business points of call are kept to substantiate business kilometers driven. This is especially necessary when business travel is done on weekends and holidays. If a Canada Customs and Revenue Agency ("CCRA") audit is done on the personal use of the vehicle, it is the employee's responsibility to justify the personal kilometers reported. If they cannot be justified, CCRA may assess the employee according to their findings.


2.  Definitions

2.1  Automobile

An automobile is a motor vehicle designed or adapted primarily to carry not more than a driver and eight passengers on highways and streets. The following table describes whether or not the vehicle is considered an automobile by CCRA:

Type of Vehicle

Seating (including driver)

Business Use in Year

Vehicle Definition

Coupe, sedan, station wagon, sports or luxury car

1 to 9

1% to 100%

Automobile (use 3.1 for tax benefit)

Pickup truck used to transport goods or equipment

1 to 3

more than 50%

Motor vehicle (use 3.2 for tax benefit)

Pickup truck other than above

1 to 3

1% to 100%

Automobile (use 3.1 for tax benefit)

Pickup truck with extended cab used to transport goods, equipment or passengers

4 to 9

90% or more

Motor vehicle (use 3.2 for tax benefit)

Pickup truck with extended cab used to transport goods, equipment or passengers and is used at a special/remote work site 4 to 9 more than 50% Motor vehicle (use 3.2 for tax benefit)

Pickup truck with extended cab (other than above)

4 to 9

1% to 100%

Automobile (use 3.1 for tax benefit)

Sport utility used to transport goods, equipment, or passengers

4 to 9

90% or more

Motor Vehicle (use 3.2 for tax benefit)

Sport utility (other than above)

4 to 9

1% to 100%

Automobile (use 3.1 for tax benefit)

Van or minivan used to transport goods or equipment

1 to 3

more than 50%

motor vehicleIt is Revenue Canada's view that in the situation where the rear seats of a van or a similar vehicle have been removed, it will still be considered an automobile unless the removal could be said to have permanently altered the vehicle such that the seats could not easily be refitted. (use 3.2 for tax benefit)

Van or minivan (other than above)

1 to 3

1% to 100%

Automobile (use 3.1 for tax benefit)

Van or minivan used to transport goods, equipment or passengers

4 to 9

more than 90%

Motor vehicle (use 3.2 for tax benefit)

Van or minivan (other than above)

4 to 9

1% to 100%

Automobile (use 3.1 for tax benefit)

Bus, cargo van, one and two ton trucks

any number

1% to 100%

motor vehicle (use 3.2 for tax benefit)

 
2.2  Personal Kilometers

Personal kilometers are all kilometers driven by employees using University vehicles for non-university business, including travel between home and the work place, even though the employee may have to return to work after regular duty hours.

If employees drive directly from their residence to a project or work site other than their "regular place of work", then the kilometers are not considered personal. As well, if the employees return directly home from a project or work site without reporting to their "regular place of work", then the kilometers are not considered personal.

For employees with Take Home or Personal Use privileges who drive home from their "regular place of work" and leave from home to a work site in the morning, the trip home would be personal, the trip to the work site the next morning would not be personal.

Also, if the following circumstances occur irregularly and infrequently (i.e. are unscheduled), the trip home is not considered personal travel:

 
2.3  Available for Use

The total available days will include the days during which the automobile is made available to the employee and each day thereafter until such time as the employee is required by the employer to return the automobile and the control over its use to the employer. In situations where the employee is ill, disabled or on holidays and physically unable to use the vehicle and even if it is parked at the University, it is the Canada Customs and Revenue Agency's view that the vehicle is still available for use unless the University has a policy whereby the employee is required to return the automobile and the control over its use to the employer.

 
2.4  Regular Place of Work

The regular place of work is usually the location at or from which the employee performs the duties of employment and/or receives work instructions. There may be more than one regular workplace and the place from which an employee performs the duties of employment may change from time to time. If an employee, whose regular place of work is located off-campus, is required to regularly and habitually attend staff or other meetings at the main office, it may be that the main office remains one of two locations from which the employee regularly performs the duties of employment. In determining whether a particular location is a regular place of work, the regularity of the reporting and the nature of the duties carried on at this location is more important than the fact that an employee may only report to the work location once or twice each month.

 
2.5  Project or Work Site

A location where the employee carries out employment duties, and is not one of the employee's regular places of work.

1 It is Revenue Canada's view that in the situation where the rear seats of a van or a similar vehicle have been removed, it will still be considered an automobile unless the removal could be said to have permanently altered the vehicle such that the seats could not easily be refitted.


3.  Taxable Benefit Calculation

The taxable benefit is reduced by any reimbursements paid by the employee for personal use.

 
3.1  Taxable Benefit Calculation - Automobiles

The automobile taxable benefit is the sum of two values: the Standby Charge and the Operating Cost benefit.

 
3.1.1  Standby Charge

If the vehicle is owned by the University, the standby charge is equal to the following:

Vehicle cost2 x 2% x (number of days the automobile is available for use / 30 days)

If the vehicle is leased by the University, including CVA vehicles, the standby charge is equal to the following:

2/3 x total lease payments3 for the period the vehicle was available for use

Employees can qualify for Reduced Standby if all of the following conditions are met:

The employer requires the employee to use the vehicle to perform his/her duties;
The employee's personal kilometers do not exceed 50% (2002 -10%) of the total vehicle kilometers during the period the vehicle is available for use by the employee; and
The number of personal kilometers in the taxation year is less than 1667 kilometers (2002 - 1000 kilometers) times the approximate number of months the vehicle is available for personal use to the employee.

If all of the above conditions are met, then the standby charge will be reduced by the following fraction:

A/ (1667 x B/30)

Where: 
A= Personal kilometers driven
B= Number of days the vehicle was available for use
 
 
3.1.2  Operating Charge

The operating charge will be equal to either

  1. Where business use exceeds 50% and the employee notifies the University, in writing before the end of the year, then the operating charge will equal 50% of the standby charge as calculated under 3.1.1 above, or
  2. The operating cost benefit rate set by CCRA. For 2005, the rate is $0.20 per personal kilometer driven (2004 - $0.17/km).
 
3.2  Taxable Benefit Calculation - Motor Vehicle

If the vehicle is not an automobile, the taxable benefit will depend upon the extent the employee uses the vehicle for personal use.

 
3.2.1  Take Home Privileges Only

If the only personal use is the kilometers between the employee's home and place of work, then the taxable benefit will equal the personal kilometers times the University's prevailing rate, unless significantly different from the rates prescribed in section 7306 of the Income Tax Regulations.

 
3.2.2.  Personal Use Privileges Beyond Take Home

If the personal use extends beyond the take home kilometers, then the taxable benefit will be equal to the fair value of the benefit. The amount an employee would usually pay in an arm's length transaction for the use of comparable transportation could be considered to be the fair market value. A benefit calculated on the basis of an apportionment of the employer's operating costs and capital cost allowance may or may not represent the value of the benefit.

Employees in this category require prior approval from the Vice-President (Finance & Resources) since this type of arrangement is not in accordance to the University's policy.

 

2 The vehicle cost is the original cost of the vehicle including PST and net GST, if applicable.
3 The total lease payments will exclude any amounts which is part of the cost of insuring against loss of, or damage to, the automobile or liability resulting from the use or operation of the automobile.
 


 
4.  Summary

1.  Is the vehicle used for "personal use"? 

If no, then there is no taxable benefit.
If yes, then continue to question 2
 
2.  Is the vehicle an "automobile" for tax purposes?
If no, then go to question 3.
 
If yes, then the taxable benefit will be the total of the following:
 
(i) Standby charge, and
(ii) Operating benefit
    Less any reimbursements made to the University
 
3.  Is the personal use restricted to the distance between home and the work place?

If yes, then the taxable benefit will be total kilometers driven during the year between home and the work place times the University's prevailing rate less any reimbursements made to the University/SPMC. In most cases, this amount will be zero.

If no, then the taxable benefit will be equal to the fair value of the benefit (i.e. the amount an employee would usually pay in an arm's length transaction for the use of comparable transportation). Employees in this category require prior approval from the Vice-President (Finance & Resources) since this type of arrangement is not in accordance to the University's policy.