Acco340Lecture 2-3 - Employment Income

Ii auto is primarily ie more than 50 used for

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                       ii) Auto is “primarily”  (ie,  more than 50%)   used for employment related duties (   as determined by km driven     )                          iii) Non-employment use of auto is less than 1,667 km per month, ie, maximum is 20,004 km per year - Reduced   Basic Standby Charge   benefit  (owned or leased auto) is calculated as per following formula: Non-Employment km ( up to max. of denominator)   1,667 km  X  Months of Availability                   X  Full Standby = the Reduced Standby Benefit                                                                                                                                                  NOTE: -the Numerator cannot exceed 1,667 km per mth x12, ie, 20,004 km ; and the fraction cannot exceed   1            -the lower the non-employment km (ie, low personal km use), the lower the taxable standby benefit      - Payments  by employees for the  personal use of the employer provided auto , as per ITA  6(1)(e),  will reduce  the standby charge benefit  and, if the payment is in excess of the standby benefit, the  operating  expense  benefit can   also be reduced by this excess however, if an excess still remains after this reduction, no   other taxable benefit can  be reduced by such excess payments. 2. Operating Cost Benefit (if the employer pays for all the costs of operating the auto)  ITA (6)(1)(k) provides administrative solution to calculating operating cost benefit by providing a prescribed  kilometre rate amount (which includes the GST) for the number of personal kilometres driven . Kilometre driven  to and from an employee’s normal work location, are considered to be personal kilometres.     ( For 2010, the rate is 24¢ per km  for individuals not employed primarily in selling or leasing automobiles)
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Alternatively, employees who   use the employer provided auto “primarily” (50% or more)   for employment  purposes,  can elect  to have the operating cost benefit to be 50% of the standby charge benefit. Note: These 2 types of calculations are both   regardless of the actual operating expenses   (eg. gas,  repairs, insurance, etc.) paid by the employer to operate the auto. ITA 6(1)(k) can allow for the operating cost benefit to be reduced by any payments for operating expenses made   by the employee , but not the prescribed rate Note: Payments in excess of the operating cost  benefit cannot  
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