6 October 2000 External T.I. 2000-0022565 - SCRAMBLE PARKING

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

1.) Whether the situation meets the definition of scramble parking.

2.) If it meets the definition, that we confirm that taxable benefits not be assessed.

3.) In addition, if block heater users are charged a fee for power consumption on a cost recovery basis, would that change our answers to questions 1 and 2 and in what way.

Position:

1.) No
2.) Cannot since taxable benefit
3.) No

Reasons:

In summary, if the number of parking spaces available accommodates most of the employees who want one (not necessarily all employees), there is no scramble parking and the benefit is taxable under paragraph 6(1)(a) of the ITA.

XXXXXXXXXX Cornelis Rystenbil, CGA

Attention: XXXXXXXXXX

October 6, 2000

Dear Sir:

Re: Taxable Benefits - Scramble parking

This is in reply to your request dated April 24, 2000, in which you inquire whether employer-provided parking is taxable in a particular situation. In your request and our subsequent telephone conversation of September 29, 2000 (Rystenbil/XXXXXXXXXX), you have indicated that there are XXXXXXXXXX parking spots and that the average car count during a given time is XXXXXXXXXX cars. The average number of employees working during the day shift is XXXXXXXXXX with a higher number of employees during the evening shifts. The total number of employees working for the organization is between XXXXXXXXXX.

More specifically, you asked the following questions:

1 ) Whether the situation as described in your request meets the definition of scramble parking;

2 ) if it meets the definition, that we confirm that your employees will not be assessed a taxable benefit; and,

3 ) in addition, you asked that if you charged users for block heating power consumption on a cost recovery basis, would that change our answers to questions 1 and 2 and in what way.

Our comments:

There is no definition in the Income Tax Act pertaining to scramble parking. The Employer's Guide to Taxable Benefits defines it as follows: "there are fewer spaces than there are employees who require parking, and spaces are available on a first-come, first-served basis". As such, if the number of parking spaces available accommodates most of the employees who want one (not necessarily all employees), there is no scramble parking.

Based on the information provided, the number of people working per shift is close to the total parking spots available. In addition, it is likely that not all employees would bring their cars; for example, some may use public transportation, shuttle buses, car pooling, etc. As a result, it appears that all employees who bring in their cars may well have a parking spot. Accordingly, in our view, the situation described does not appear to meet the definition of scramble parking.

With reference to your second question, since, in our view, the situation does not meet the definition of scramble parking, a taxable benefit for employer-provided parking should be included in the income of the employees using the parking area under paragraph 6(1)(a) of the Income Tax Act.

With regard to your third question, if you charge the users of the parking lot for block heater power consumption on a cost recovery basis, our views expressed above would not change. However, it should be noted that the amount of the benefit to be included in income is based on the fair market value of the parking minus any payment an employee makes to use the space.

This is our view based on the situation described. However, as this appears to be an actual situation, you should contact the appropriate Tax Services Office for their comments. A review of all the facts surrounding this particular situation would be required to conclusively resolve any questions of fact and this would be best resolved by the Tax Services Office.

We trust that these comments will be of assistance.

Yours truly,

Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings Directorate

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