Calculating the Value of the Operating-Costs Benefit
If you or a person related to you pays expenses related to the personal use of an automobile made available to an employee or to a person related to the employee, you must include a benefit related to automobile operating costs in the employee's income.
You can use work chart TP-41.C-V, Calculation of an Automobile Benefit, or either of the methods below to calculate the value of the operating-costs benefit.
Under the basic calculation method, the operating-costs benefit related to the personal use of an automobile is $0.27 per kilometre for 2021 ($0.28 per kilometre for 2020). If an employee principally sells or leases automobiles, the benefit is $0.24 per kilometre for 2021 ($0.25 per kilometre for 2020).
You can use the simplified calculation method if both of the following conditions are met:
- The employee uses the automobile primarily (more than 50%) in the performance of his or her duties.
- The employee notifies you in writing, before the end of the year, of his or her intention to use the simplified method to calculate the operating-costs benefit.
Under this method, you calculate the operating-costs benefit at one-half of the reasonable amount that is the standby charge before deducting any amounts reimbursed by the employee for the standby charge.
If, in the year or within 45 days after the end of the year, the employee (or a person related to the employee) reimburses you (or a person related to you) for the operating costs (including taxes) related to the employee's personal use of an automobile (or the personal use of an automobile by a person related to the employee) in the year, the employee receives no taxable benefit.
If only a portion of these costs is reimbursed, subtract the amount reimbursed from the employee's operating-costs benefit.
For sample calculations of the operating costs, see guide IN-253-V, Taxable Benefits.