In today’s competitive hiring market for employees, many employers are trying to find good incentives to lure and keep great employees. One popular one is the “company car”.
The tax rules used to be very prohibitive in this area. The rules have now changed and I can say that in many circumstances, a company car is a cost effective “perk”. The problem is that it is not a universally good thing. We find that employees with under 50% business usage of the car are almost never better off than they would have been if you had just given them a raise to match the car costs. We find that it is a bit of a sliding scale between 50% and 100% business usage and that at the top (90 to 100%), it makes business and tax sense. In the middle, we have to look at it on a case by case basis.
The caution here is don’t just assume that a company car is a tax effective form of a benefit.
Contact us at partner@gilmour.ca or www.gilmour.ca
We are Professional Corporate Tax Accountants / Advisors
Chartered Accountants serving Langley, Surrey and Abbotsford British Columbia
