Question

Ms. Sarah Wexler is provided with a car by her employer. It is leased for the entire year by the employer for $728 per month, including $78 of HST. The lease payment also includes a payment of $50 per month to cover insuring the vehicle. During 2020, Ms. Wexler uses the car for 10 months. During the other 2 months, the employer requires that the car be returned to their premises. She drives the car 76,000 kilometers during this period, of which 23,000 are for personal use.

Calculate Ms. Wexler's minimum taxable benefit for the use of the automobile that she would have to include in her net employment income.

Answer 1

As Ms. Wexler’s employment related usage is more than 50 percent, she is eligible for a reduction in the basic standby charge. She is also eligible for the alternative one-half of the standby charge calculation of the operating cost benefit. Given these factors, the taxable benefit would be calculated as follows:

Standby Charge

[(2/3)($728 - $50)(10)(16,670* / 16,670*)]    $4,520

Add:- Operating Cost Benefit - Lesser Of:

a. [($0.26)(23,000)] = $5,980

b. [(1/2)($4,520)] = $2,260                                                 $2,260

Total Benefit                                                                        $6,780

*[(10)(1,667)] - the numerator cannot exceed the denominator