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:
Is a "Cap" on mileage allowance sufficient to make it taxable ?
Position:
Case by case basis
Reasons:
Question of fact whether allowance is reasonable
971166
XXXXXXXXXX C. Tremblay
August 27, 1997
Dear Sir:
Re: "Cap" Mileage Allowance
This is in reply to your facsimile letter of April 30, 1997, wherein you requested our views on whether a "cap" on a mileage allowance calculated on a per kilometre basis would make the payment taxable to the employee.
In order to be excluded from income under subparagraph 6(1)(b)(vii.1) the travel allowance must be a reasonable allowance for the use of a motor vehicle received by an employee for travelling in the performance of the duties of the office or employment. The allowance is deemed not to be a reasonable allowance where the measurement of the use of the vehicle for the purpose of the allowance is not based solely on the number of kilometres for which the vehicle is used in connection with or in the course of the office or employment. The question of what is a reasonable allowance can only be determined on a case by case basis, taking into consideration each employee's circumstance. Where the employee's automobile expenses for business use in a year exceed the total allowance received in that year because of a "cap" on the mileage allowance, the Department will accept the view that the employee's automobile allowance is not reasonable.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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