My turn to rant, taxable benefit issue

[lookinforwalleye]

I have been a sales rep for more years than I care to remember anyways up until a few years ago I always had a company car and company gas cards no issues, now I recieve a car allowance and I am reimbursed for the gas I use to conduct company business thats all fine and dandy until this tax year when the nice folks at revcan decide to make the gas reinbursments I recieve from my company a taxable benefit and thus I have to pay tax on this so called benefit so for every dollar I spend on gas to do company business I recieve 65 cents back.

The way our company accountant explains this to me is revcan figures if I stop off at walmart on the way home then I should pay for this which I agree with but the 2000 dollars I get dinged in tax buys a lot of gas.

I think I am going to have to think of a creative way to get my 2 grand back!!!

 

End of rant

Edited April 12, 2012 by lookinforwalleye

[bushart]

Not to worry

 

You lost the long gun registry

[Dutch]

I have been a sales rep for more years than I care to remember anyways up until a few years ago I always had a company car and company gas cards no issues, now I recieve a car allowance and I am reimbursed for the gas I use to conduct company business thats all fine and dandy until this tax year when the nice folks at revcan decide to make the gas reinbursments I recieve from my company a taxable benefit and thus I have to pay tax on this so called benefit so for every dollar I spend on gas to do company business I recieve 65 cents back.

The way our company accountant explains this to me is revcan figures if I stop off at walmart on the way home then I should pay for this which I agree with but the 2000 dollars I get dinged in tax buys a lot of gas.

I think I am going to have to think of a creative way to get my 2 grand back!!!

 

End of rant

 

No need to be creative. If you are in receipt of a taxable car allowance (allowances are always taxable, a per k.m. reimbursement is usually not) you can deduct the actual costs incurred which are typically higher than the allowance.

 

You need to get a T2200 filled out by our employer and you also need to have an idea how many k.m were personal and how many were business related. Take your total expenses and multiply by the business use percentage, you will get the employment related expenses which you can then deduct from the income.

 

PS - you should talk to your employer to see if they will reimburse you at a per k.m. rate, then it is usually not taxable. You employer's accountant should have known this could happen. It is a pretty common and basic principle of income taxes. They should shoulder the blame. CRA is just holding them accountable through your reassessment.

Edited April 12, 2012 by Dutch

[lookinforwalleye]

I understand that allowances are taxable but in the case of the gas it`s not an allowance I am just being reimbursed for money out of my pocket, if I spend 500 a month my company gives me a cheque for that 500 hundred but the gov deems this a taxable benefit and thus I pay tax.

[irishfield]

I understand that allowances are taxable but in the case of the gas it`s not an allowance I am just being reimbursed for money out of my pocket, if I spend 500 a month my company gives me a cheque for that 500 hundred but the gov deems this a taxable benefit and thus I pay tax.

 

So who was the idiot that showed Revcan the reimbursement? No reason for it to have gone on your T4... or to have been mentioned at all Gord.

 

I've taken gas receipts from key employees for 27 years.. wrote them a cheque for same and it goes thru the business as a vehicle fuel expense (as a 100% deduction) against the P & L. There is no reason to show it as an employee benefit if you were travelling strictly on business. Now a company vehicles value, used for personal use as well.. that's another story, but painless as well when under 10% personal usage.

[lookinforwalleye]

That`s how I see it Wayne there is no reason for this to have gone on the T4 as a taxable benefit, I have searched all available CRA documents regarding company vehicles/car allowances etc. and I can not finding anything explaining this.

[irishfield]

Make it up next year with a few jerry cans for the boat in the truck.. regularily!

[Terry]

do you claim your vehicle and repairs

[lookinforwalleye]

do you claim your vehicle and repairs

 

yes the portion that relates to business use including,insurance,license etc.etc.

[Terry]

then it becomes a taxable income

[lookinforwalleye]

Make it up next year with a few jerry cans for the boat in the truck.. regularily!

 

I am going to talk to my boss Monday regarding this matter and if it`s not resolved to my satisfaction then I will get creative!

[Terry]

we have a choice where I work

we can be reimbursed for mileage and wear and tear tax free

or we can be paid the same amount and pay tax on it but claim our vehicles on our taxes for work usage

[Wolf 3]

That`s how I see it Wayne there is no reason for this to have gone on the T4 as a taxable benefit, I have searched all available CRA documents regarding company vehicles/car allowances etc. and I can not finding anything explaining this.

 

Follow this link http://www.cra-arc.g...html#P228_14209.

 

Scroll down to the section "Automobile and Motor Vehicle allowances".

[lookinforwalleye]

then it becomes a taxable income

 

Yes my a car allowance is a taxable benefit and I can and do write off the associated expenses but can somebody show me some documentation stating that my company paying me back money that I spent on gas to do company business is a benefit to me and therefore I should pay tax then fine, I will make sure I get my moneys worth out of this so called taxable benefit.

Guess who`s gonna be paying the gas for the Jeep and the Stratos this summer.

[kickingfrog]

Guess who`s gonna be paying the gas for the Jeep and the Stratos this summer.

 

Tax payers? jk

 

Does seem screwy to have the total deemed a taxable benefit.

[lookinforwalleye]

Tax payers? jk

 

Does seem screwy to have the total deemed a taxable benefit.

 

yes and thats what I am having a hard time swallowing!

 

You`ll have to come up to dalrymple one saturday Rob and get your share of said taxable benefit....do you think you would have to claim that as a taxable benefit?

[John Bacon]

If I understand you correctly this is a personal car that you use for a mix of personal and company driving. If this is the case, how would they re-imburse you for gas that you used for company driving? All of the gas is going to one tank; how can you distinguish between gas used for business mileage versus gas used for personal mileage?

 

As stated in previous responses you can deduct a portion of your auto expenses on the tax return. While the you have to claim the re-imbursement for gas as income; you can also deduct the cost of the gas as an auto expense. If 80% of your driving is for business then you get to deduct 80% of the cost of gas. You would effectively only be taxed on the 20% of the gas that you used for personal mileage. I think that is pretty reasonable.

 

By they, don't just pick a percentage out of the air for your business portion. Keep track of your business trips and calculate the correct percentage. That way you do not have to worry about being audited.

[Dutch]

Yes my a car allowance is a taxable benefit and I can and do write off the associated expenses but can somebody show me some documentation stating that my company paying me back money that I spent on gas to do company business is a benefit to me and therefore I should pay tax then fine, I will make sure I get my moneys worth out of this so called taxable benefit.

Guess who`s gonna be paying the gas for the Jeep and the Stratos this summer.

 

This is the part you need to understand:

 

""Automobile and motor vehicle allowances

An allowance is any payment that employees receive from an employer for using their own vehicle in connection with or in the course of their office or employment without having to account for its use. This payment is in addition to their salary or wages. An allowance is taxable unless it is based on a reasonable per-kilometre rate.

 

This section explains common forms of automobile and motor vehicle allowances.

 

Employees receiving a taxable allowance may be able to claim allowable expenses on their income tax and benefit return. See Employee’s allowable employment expenses.

 

Reasonable per-kilometre allowance

If you pay your employee an allowance based on a per-kilometre rate that we consider reasonable, do not deduct CPP contributions, EI premiums, or income tax.

 

The type of vehicle and the driving conditions usually determine whether we consider an allowance to be reasonable. The per-kilometre rates that we usually consider reasonable are the amounts prescribed in section 7306 of the Income Tax Regulations. Although these rates represent the maximum amount that you can deduct as business expenses, you can use them as a guideline to determine if the allowance paid to your employee is reasonable.

 

We consider an allowance to be reasonable if all the following conditions apply:

 

•The allowance is based only on the number of business kilometres driven in a year.

•The rate per kilometre is reasonable.

•You did not reimburse the employee for expenses related to the same use of the vehicle. This does not apply to situations where you reimburse an employee for toll or ferry charges or supplementary business insurance, if you determined the allowance without including these reimbursements.

When your employees complete their income tax and benefit return, they do not include this allowance in income.

 

Reasonable allowance rates

For 2011, they are:

 

•52¢ per kilometre for the first 5,000 kilometres driven; and

•46¢ per kilometre driven after that.

In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometre allowed for travel.

 

Per-kilometre allowance rates that we do not consider reasonable

If you pay your employee an allowance based on a per-kilometre rate that we do not consider reasonable because it is either too high or too low, it is a taxable benefit and has to be included in the employee’s income.

 

Note

If you pay your employee an allowance that is unreasonably low and your employee does not claim allowable expenses on his or her income tax and benefit return, you may not have to include it in his or her income.

 

Flat-rate allowance

If you pay your employee an allowance based on a flat rate that is not related to the number of kilometres driven, it is a taxable benefit and has to be included in the employee’s income.

 

Combination of flat-rate and reasonable per-kilometre allowances

If you pay your employee an allowance that is a combination of flat-rate and reasonable per-kilometre allowances that cover the same use for the vehicle, the total combined allowance is a taxable benefit and has to be included in the employee’s income."

============================================

You mentioned that your vehicle allowance is included in your T4, but you are reimbursed for gas? I'm assuming you aren't deducting the cost of the gas that you are reibursed for as an employment expense. Also - you are probably being re-assessed because of an audit at your employer's place of business."

 

The reason you are having to include the reimbursement in income is there is no way to tell how much of the gas was used for employment and how much was personal - therefore it is deemed to be an allowance not based on k.m. and that is what makes it taxable. Do you have to provide receipts for the reimbursement? If the employer is paying 100% of the gas, then why not give you a corporate purchasing card and the Co. pays it directly and cuts you out altogehter - no tax implications at all.

Edited April 13, 2012 by Dutch

[lookinforwalleye]

The vehicle is used 85-90% for business and I do keep a log and thats how I calculate my deduction for automobile expenses, when I use the vehicle for personal use I use my own gas money.

I do provide reciepts to my company for gas, I have no problem paying a reasonable amount of tax for stopping to get a hair cut on the way home but to taxed a your marginal tax rate on the whole amount is ridiculous.

 

I did find CRA form T4130 that clearly states that reimbursements for gas etc. is not to be included as taxable income.

[Terry]

yeah but that is for using your personal vehicle, if you claim your vehicle on your taxes, then the reimbursement is for a business vehicle ...hey I don't make the rules ..

[John Bacon]

The vehicle is used 85-90% for business and I do keep a log and thats how I calculate my deduction for automobile expenses, when I use the vehicle for personal use I use my own gas money.

 

Yes but lets be reasonable. The gas is all going into one tank whether it is you or the company that pays for it. You are using the gas from that one tank regardless of whether it is personal or business mileage. There is no way to make sure that the gas that the company buys is used for business mileage and that only the gas that you pay for is used for personal mileage.

 

 

 

The vehicle is used 85-90% for business and I do keep a log and thats how I calculate my deduction for automobile expenses, when I use the vehicle for personal use I use my own gas money.

I do provide reciepts to my company for gas, I have no problem paying a reasonable amount of tax for stopping to get a hair cut on the way home but to taxed a your marginal tax rate on the whole amount is ridiculous.

 

But you are not paying tax on the entire amount. The re-imbursement is added to your income but the expense is deductable (I would include the gas that the company pay for in your auto expenses) for tax purposes. If 85-90% of your driving is for business that you can deduct 85-90% of you fuel cost for business. So would effectively be taxed on the 10-15% of the gas that is used for personal use. I think that is pretty reasonable.

[lookinforwalleye]

Yes but lets be reasonable. The gas is all going into one tank whether it is you or the company that pays for it. You are using the gas from that one tank regardless of whether it is personal or business mileage. There is no way to make sure that the gas that the company buys is used for business mileage and that only the gas that you pay for is used for personal mileage.

 

 

 

 

 

But you are not paying tax on the entire amount. The re-imbursement is added to your income but the expense is deductable (I would include the gas that the company pay for in your auto expenses) for tax purposes. If 85-90% of your driving is for business that you can deduct 85-90% of you fuel cost for business. So would effectively be taxed on the 10-15% of the gas that is used for personal use. I think that is pretty reasonable.

 

How can I claim the gas/reimbursement as a tax deduction?, I have paid and been reimbursed now your saying claim the gas a second time?

Can`t CRA being okay with that!

[Billy Bob]

Your getting screwed 7 ways to Sunday....not only are you paying a reimbursement income tax but that EXPENSIVE gasoline has already been taxed to the max....so you are paying twice on gas your using for your employer....

 

He's what to do.....write your representive and ask him how he handles his reimbursements while he's representing you....

 

Remember....for every dollar you send to the government, they waist about $1.31 so that means they have to raise taxes again to make up for the loss...

[mercman]

Your getting screwed 7 ways to Sunday....not only are you paying a reimbursement income tax but that EXPENSIVE gasoline has already been taxed to the max....so you are paying twice on gas your using for your employer....

 

He's what to do.....write your representive and ask him how he handles his reimbursements while he's representing you....

 

Remember....for every dollar you send to the government, they waist about $1.31 so that means they have to raise taxes again to make up for the loss...

 

 

Was wondering when you were gonna pipe in with your tax ideas

[Billy Bob]

Was wondering when you were gonna pipe in with your tax ideas

 

I learned a LONG time ago to watch what congress does and do the same....they NEVER screw themselves....