Question

Ms. Sarah Wexler is provided with a car by her employer. It is leased 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 it 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.

Answer 1

There are three cases with three different treatments according to Income Tax Act:

Car is used for Private Purpose

Car is used for Private and Official Purpose

Car is used for Official Purpose

Here, the car is used for both Private and Official Purpose:

So, according to the Income Tax provisions, following is the treatment:

1. If Employer provides the car with the driver, there will be monthly perk of Rs.900 along with the following

(a) If car≤1600 cc, Rs 600pm, thus total perk is 600*10+900*10=Rs 15000

(b) If car>1600 cc, Rs 900pm, thus total perk is 900*10+900*10=Rs 18000

2. If Employer provides the car without the driver, then

(a) If car≤1600 cc, Rs 600pm, thus total perk is 600*10=Rs 6000

(b) If car>1600 cc, Rs 900pm, thus total perk is 900*10=Rs 9000

Here we have assumed that the expenses related to the car are met by Ms Wexler, but if employer incurs the expenses, then following is the treatment-

1. If Employer provides the car with the driver, there will be monthly perk of Rs.900 along with the following

(a) If car≤1600 cc, Rs 1600pm, thus total perk is 1800*10+900*10=Rs 27000

(b) If car>1600 cc, Rs 2400pm, thus total perk is 2400*10+900*10=Rs 33000

2. If Employer provides the car without the driver, then

(a) If car≤1600 cc, Rs 1600pm, thus total perk is 1800*10=Rs 18000

(b) If car>1600 cc, Rs 2400pm, thus total perk is 2400*10=Rs 24000