Basis for purported vehicle allowance paid by employer to taxpayer did not qualify as being reasonable

Taxpayer was employee of commercial snow and ice clearing business whose responsibilities included making snow runs, which he made in his own vehicle. Snow runs included taxpayer driving throughout area on fixed route going past each of employee’s client locations to visually check if clearing or further clearing or salting of snow and ice was required. Distance of snow run fixed route was approximately 92 kilometres, and snow runs were done as employer deemed needed and no record was kept by employer of number of snow runs done. Taxpayer was paid vehicle allowance by employer to compensate for snow runs, which was fixed in amount of $9,100 annually and taxpayer did not report this amount on tax returns, because he thought it was deductible. Minister added $9,100 to taxpayer’s income for two taxation years on basis that these amounts were not reasonable vehicle allowances. Taxpayer appealed. Appeal dismissed. S. 6(1)(b)(x) and s. 6(1)(b)(vii.1) of Income Tax Act made it clear that vehicular allowances were not excludable from income unless allowance amount was based on number of kilometres for which vehicle was used in course of employment. In this case, $9,100 was amount calculated on basis of average number of snow runs total, but number of snow runs made was estimated, meaning actual number of kilometres specifically driven by taxpayer was not known but estimated. Effect of legislation was clear that basis for purported vehicle allowance paid by employer to taxpayer did not qualify as being reasonable, because amounts paid were not determined based solely on kilometres actually driven.

Positano v. The Queen (2018), 2018 CarswellNat 4110, 2018 TCC 160, B. Russell J. (T.C.C. [Informal Procedure]).

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