T4 - Standby Charge (AutoTax)

According to subsection 6(2) ITA, the formula to calculate the standby charge is: (A / B) X 2% X (C X D) + ( 2 / 3) X (E - F)

Definition of "A"

If the employee has to use the automobile in his or her job and at least 50% of the kilometres driven were for work-related purposes:

A =  1) the total number of non-business kilometres the automobile was driven in the total number of days in the year the automobile was available to the employee;

2) the value of B, whichever is less.

In all other cases, A = B.

Definition of "B"

1,667 multiplied by the quotient obtained by dividing the number of days the automobile was available to the employee by 30, rounded to the nearest whole number.

Definition of "C"

The employer's cost of the automobile if the employer owned the automobile at any time in the year; or

The greater of the following amounts if the employee is employed principally to sell or lease automobiles and the employer chooses to use the optional method to calculate the standby charge:

1) the employer's average cost of all factory-new automobiles (including GST and PST) acquired in the year; or

2) the employer's average cost of all automobiles acquired in the year (including GST and PST).

Definition of "D"

The number obtained by dividing the number of days the automobile was owned by the employer and was available to the employee by 30, rounded to the nearest whole number.

Definition of "E"

All amounts the employer paid under the leasing contract for leasing the vehicle during the time it was available to the employee.

Definition of "F"

The liability and collision insurance costs included in E.