T4 – Reducing the Operating Cost Benefit (AutoTax)
The employee or shareholder can reduce the operating cost benefit of the vehicle if more than half of the distance is driven for business purposes.
If this condition has been met, the employee or shareholder can calculate the operating costs of the vehicle at 50% of the standby charge before deducting any payments the employee or shareholder made.
If the employee or shareholder chooses this method, instead of using the rate of 25 cents per kilometer method to calculate operating costs, the employee or shareholder must notify the employer or corporation in writing before the end of the year. Also, if the employee or shareholder using the automobile pays part of the vehicle's operating costs, the payments must be deducted from the calculated benefit.
This notice is generated by Taxprep Forms when you select the box pertaining to paragraph 6(1)k) ITA or section 41.1.1 TA (for Québec purposes).
Note: If the choice is available but the operating cost benefit is less than 50% of the standby charge, it is therefore not recommended to make this election by checking this box.
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