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Auto Standby Charge

When a company owned vehicle is supplied for the use of an employee or the owner/shareholder, there is a deemed taxable benefit. 

The benefit consists of:
(a)    An operating charge of 12 cents per personal kilometer driven.
(b)   A standby charge calculated using a formula provided by Canada Revenue.
(c)    Minus any money paid back to the company by the employee. 

How to account for this:
(a)    The benefit should be calculated on an annual basis
(b)   The calculated benefit should be put on the employees T-4
(c)    The amount could be paid by the employee to the company to avoid the benefit calculation.
(d)   If a shareholder, this amount could be deducted from an outstanding shareholder loan. 

What you must know:
(a)    Cost of the vehicle provided
(b)   Number of days in the year that the vehicle was available
(c)    Total Kilometers driven in the year
(d)   Total personal Kilometers driven in the year. 

More information is provided at the Canada Revenue Web site: http://www.cra-arc.gc.ca

 Look for IT63r5 and RC18E