TaxMatters@EY - December 2012

Company car: do you have a logbook?

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Andrew Rosner and Maureen De Lisser, Toronto

In a recent interpretation, the Canada Revenue Agency (CRA) confirmed a longstanding position that a taxable benefit arises when an employee uses an employer-provided vehicle to travel between home and regular workplace. An exception to income inclusion may apply, for example, if an employer requires an employee to travel directly from one work location to another work location, or if an employee performs his or her duties at a special work site.

Although the Income Tax Act does not specify the documentary requirements related to the use of a vehicle, the CRA has reiterated that an employee is required to keep records enabling an objective determination of business/personal use of a vehicle, and that an accurate logbook remains the “best evidence” in this regard.

The logbook should show each trip, the date of the trip, the destination, the reason for the trip and the distance covered. (Note: for Quebec income tax purposes, an employee is specifically required under the Quebec Taxation Act to maintain a logbook and provide a copy to the employer.)


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