Income Tax T2200

[Pilsner12]

I know tax questions have been asked here in the past and I did a quick search and didn't see one that asked this question.

I am a commissioned employee who is required to spend about 90% of my time out of the office. For use of my vehicle I am paid a car allowance of $0.40/km.
The current reasonable rate in Alberta for under 5,000km a year is $0.52/km and $0.46/km for over 5,000km a year.

Last year I had 22,000km of business travel.

When I was filing my return I was told that I could not claim my car expenses because I received a reasonable allowance. To me this does not make sense when:
1.) The province has a posted reasonable rate that my allowance is under.
2.) After maintenance on the car, gas insurance and registration there is not much left to cover the wear and tear of my vehicle. I estimate the difference is approximately $600-$800 from what I was paid to what my car cost me to operate for work.

I called Revenue Canada for an explanation and the person I spoke to said he was aware of the forms that I was talking about and validated my understanding of the "rules" but when I asked him to determine what would be considered an unreasonable amount he said there was no such thing and any amount paid by the employer is viewed as reasonable in their eyes.

By that logic my employer could pay me $10 annually for use of my vehicle and in the eyes of the government it would be reasonable.

Am I understanding this correct or am I able to claim the discrepancy amount as an expense?

[THE SCUD]

Your employer, i believe, needs to sign a T2200 which states that you are travelling, etc for business. Then you can claim the shortfall.

think claiming the difference between the CRA prescribed rate and the paid amount is allowed - but not sure.

[Pilsner12]

Originally Posted by THE SCUD

Your employer, i believe, needs to sign a T2200 which states that you are travelling, etc for business. Then you can claim the shortfall.

think claiming the difference between the CRA prescribed rate and the paid amount is allowed - but not sure.

Which my employer has. If by the short half you are referring to the $.06 difference than there is a discrepancy of $1,320 which to me is significant to my return.

The short half and claiming it does seem like a grey area. It is hard to find anyone who can explain whether or not to. kind of feel like the only way a person can get a definite answer is if the CRA takes a closer look at a return that it has been claimed on when you shouldn't have.

[Ashee]

The CRA is a little vague in regards to what's reasonable and what's not (I believe it's more likely to be considered unreasonable if it's over the prescribed rate) - but keep in mind that you'd have to include your allowance in employment income if it's unreasonable (and be able to deduct expenses provided all other conditions are met), and on the other hand if your allowance is reasonable, you would not include the allowance in income but you can't deduct expenses (I don't believe you can claim it partially). I think you could perhaps argue either way - but was your allowance included in your income when you did your tax return?

[Shazam]

Originally Posted by Pilsner12

By that logic my employer could pay me $10 annually for use of my vehicle and in the eyes of the government it would be reasonable.

Yes, I do think that is correct.

$0.40 is really, really low. That was the compensation I got for using my vehicle ten years ago.

I can ask my accountant but I think you're screwed for the difference.

[cal_guy]

If you view that your employer's allowance is unreasonable then you would include your car allowance as taxable income, and report your automobile expenses.

Here are a couple of good sites for deducting employee expenses
http://www.bdo.ca/library/publicatio...ns/012007a.cfm
http://blog.taxresource.ca/if-you-us...or-employment/
http://www.cra-arc.gc.ca/tx/ndvdls/t...rvhcl-eng.html

[Ducay]

Is the difference going to be really that big of a deal and worth the hassle? If you decide to argue it; you'll end up treating the allowance as taxable income, and then can be offset by expenses. Lets say you're right, and the difference is $1,250. Depending on your tax rate and how you treat the expenses, thats ~ $187 (@15%) in cash you'd "get back".....hadly worth having to track all my expenses and keep receipts (for all, even non-business car expenses).

I'd spend the effort trying to get my rate raised that extra 4c/km (up to the 44c/km reasonable level)

[Mccree]

Originally Posted by cal_guy

If you view that your employer's allowance is unreasonable then you would include your car allowance as taxable income, and report your automobile expenses.

Here are a couple of good sites for deducting employee expenses
http://www.bdo.ca/library/publicatio...ns/012007a.cfm
http://blog.taxresource.ca/if-you-us...or-employment/
http://www.cra-arc.gc.ca/tx/ndvdls/t...rvhcl-eng.html

We do this all the time. Never any issues as long as you have a log book to back up the km's