2004 & 2003 Budget and Changes to Standby Charges on Personal
use of a Company Car and Prescribe rate for Exempt Mileage.
There were no changes in the 2004 budget and the 2003 changes are as follows:
The budget has changed the taxable benefit of an employee or
shareholder who has a company car available for his or her personal use. Before the changes some relief was available
if the car was used 90% or more for business.
This threshold has fortunately been reduced to 50% or more. The reduced standby charge now is calculated
by multiplying the standby charge by the fraction A/B. Where B is:
(Days of Available Use/30, Maximum 12) *1,667 Kms.
- and A is the lower of B and Kms
driven for personal use. This is a
favourable change from the previous formula, calculated B as:
(Days of
Available Use/30, Maximum 12) *1000 Kms.
ALSO NOTE:
Please note that the prescribed rates have also changed as
follows:
1) Limit of
deduction of tax exempt allowance paid by employer’s to employees’ was
increased to $0.42 per kilometer for the first 5,000 kilometers and $0.36 for
each additional kilometer. For Yukan
Territory, Northwest Territories and Nunavut the tax exempt allowance will rise to 46¢
for the first 5,000 kilometers driven and 40¢ for each additional
kilometer. The allowance amounts reflect the key cost components of owning and
operating an automobile, such as depreciation, financing, maintenance and fuel
costs.
2) The general prescribed rate used to determine the taxable
benefit relating to the personal portion of automobile operating expenses paid
by employers will increase to 17¢ from 16¢ per kilometer. For taxpayers employed principally in selling or leasing
automobiles, the prescribed rate will be increased to 14¢ from 13¢
per kilometer. The amount of the benefit reflects the costs of operating
an automobile. The additional benefit of having an employer-provided vehicle
available for personal use (i.e., the automobile standby charge) is calculated
separately and is also included in the employee’s income
Buy or Lease a Car Which is Better? http://www.calculeases.com
Pay
down mortgage or Contribute to RRSP which is better? http:// www.tavana.ca
