1 Province of Employment
2 Automobile Type
3 Automobile Costs
4 Mileage
5 Operating Expenses
6 Reimbursements
🧮 Step-by-Step Walkthrough▼
Enter your details above to see the step-by-step math.
📖 What Qualifies as an Automobile?▼
CRA Definition of an Automobile
For automobile benefit purposes, an automobile is a motor vehicle designed or adapted to carry individuals on highways and streets, with seating for the driver and not more than 8 passengers.
Not Considered Automobiles
- Ambulances, police, fire, and emergency vehicles
- Taxis, buses, and hearses (if used primarily for business)
- Vans and pickup trucks meeting specific criteria
Vans and Pickup Trucks
Vans and pickup trucks may be excluded from automobile benefits if:
- Seating capacity is 3 or fewer (including driver)
- Used primarily (more than 50%) for business
- Used less than 20,000 km for personal purposes per year
- Not used for personal purposes outside of work hours
- The vehicle is a pickup truck with a separate cargo area
🎯 Reduced Standby Charge — 3 Conditions▼
All 3 Conditions Must Be Met
- Employer requirement: The employer requires the employee to use the automobile for business purposes.
- Business use > 50%: The employee uses the automobile more than 50% of the total kilometres for business.
- Personal km limits: The employee's personal-use kilometres do not exceed:
- 1,667 km per 30-day period, OR
- 20,004 km per year
Reduced Rates
- Employer-owned: 1.5% per month (instead of 2%)
- Employer-leased: 2/3 × 1.5% = 1% per month (instead of 2/3 × 2% = 1.33%)
💼 Automobile Sales/Leasing Employee Special Rules▼
Who Qualifies?
Employees principally employed in selling or leasing automobiles to customers, with specific conditions:
- The employer deals in automobiles
- The employee is required to use the automobile for business
- Only one automobile at a time is used
Special Rates
- Standby charge rate: 1.5% (reduced) monthly
- Operating expense rate: 30¢/km (vs 34¢ standard)
Average Cost Rule
For sales/leasing employees, the standby charge uses the average cost of automobiles the employee was provided. If records aren't available, use the cost of the vehicle the employee primarily used.
🛠️ Operating Expense Benefit — Methods▼
Method 1 — Fixed Rate
Personal kilometres × fixed rate:
- 2026 standard rate: $0.34/km
- Sales/leasing employees: $0.30/km
Method 2 — Optional (50% of Standby)
If the employee:
- Has the standby charge included in income
- Uses the automobile more than 50% for business
- Notifies the employer in writing before year-end
The benefit can be calculated as 50% of the standby charge (before reimbursements).
Reimbursement Rule
If the employee reimburses all operating expenses within 45 days after year-end:
- No operating expense benefit arises
💱 GST/HST by Province▼
Province-Wise Rates
The GST/HST rate applied depends on the province where the employee reports to work:
- 5% GST: Alberta, British Columbia, Manitoba, Quebec, Saskatchewan, Yukon, Northwest Territories, Nunavut
- 13% HST: Ontario
- 15% HST: New Brunswick, Newfoundland & Labrador, Nova Scotia, Prince Edward Island
GST/HST Calculation
GST/HST is calculated on the standby charge reimbursement (and operating expense benefit where applicable). The employer remits this to the CRA.
Reporting
Report the GST/HST on your regular GST/HST return (Line 105 for GST/HST collected).
7 Frequently Asked Questions
What is a standby charge?
A standby charge is a taxable benefit for having an employer-provided automobile available for personal use. For employer-owned vehicles, it's generally 2% of the automobile's cost per month (or 24% annually if conditions are met). For leased vehicles, it's 2/3 of the monthly lease cost.
How is the operating expense benefit calculated?
Under the fixed rate method, the benefit is personal kilometres × 34¢ (2026 rate). Under the optional method, it can be 50% of the standby charge if the employee uses the vehicle more than 50% for business and notifies the employer in writing.
What is the reduced standby charge?
The reduced standby charge uses a 1.5% monthly rate instead of 2% when: (1) the employer requires the employee to use the automobile for business, (2) the employee uses it more than 50% for business, and (3) personal kilometres do not exceed 1,667 per 30-day period or 20,004 per year.
How does province affect the automobile benefit?
The province determines the GST/HST rate applied to the standby charge reimbursement and operating expense benefit. Ontario and Atlantic provinces have HST (13% or 15%), while Alberta, BC, Saskatchewan, Manitoba, Quebec, and the territories have 5% GST.
When can I use the optional calculation?
The optional operating expense calculation can be used if the standby charge is included in income, the employee uses the automobile more than 50% for business, and the employee notifies the employer in writing before year-end.
How do reimbursements affect the benefit?
Employee reimbursements reduce the taxable benefit. If the employee reimburses ALL operating expenses within 45 days after year-end, no operating expense benefit arises.
What is the 2026 fixed rate?
The 2026 fixed rate for the operating expense benefit is 34¢ per personal-use kilometre. For automobile sales/leasing employees, the special rate is 30¢/km.
8 Official Resources
Phone: 1-800-959-5525
Verify all calculations with the CRA's official ABOC before filing.
⚠️This tool is for information purpose only. We do not guarantee any claim.
It is made based on data publicaly available on official website of concerned department.
Last Updated: March 2026 | Official Determination Required