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Calculating the Value of the Operating-Costs Benefit

Note New

This page does not include measures announced in Information Bulletin 2023-4 concerning harmonization with the new federal measures introduced under section 2 of the Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023 (S.C. 2023, c. 26) (previously Bill C-47).

End of note

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 calculate the operating costs benefit for the vehicle.

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.

Simplified method

You can use the simplified method if both the following conditions are met:

  • The employee uses the automobile more than 50% of the time for the performance of their duties.
  • The employee informs you in writing before the end of the year of their intention to use the simplified method to calculate the operating-costs benefit.

Under the simplified method, the operating-costs benefit is equal to one-half of the amount corresponding to the standby charge, before the deduction of any amounts reimbursed by the employee for the standby charge.

Basic method

You have to use the basic method to calculate the standby charge if the conditions for using the simplified methods are not met.

Under the basic method, the operating-costs benefit related to the personal use of an automobile is $0.33 per kilometre travelled for personal purposes, for 2023. If an employee's duties consist primarily in selling or leasing automobiles, the benefit is $0.30 per kilometre travelled for personal purposes.

Amounts reimbursed by the employee for operating costs

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 total of 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.

If the amounts reimbursed exceed the value of the operating costs, you cannot use the difference to reduce the value of the standby charge you calculated for the employee.

For sample calculations of the operating costs, see guide IN-253-V, Taxable Benefits.

Note End of note

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