# What does it take to make a company shuttle service not a taxable benefit?



## upstream (Mar 22, 2012)

Our employer here in Alberta is agreable to the idea of providing a shuttle service to shuttle shift workers the 100 km from the nearest city of any size to the plant where we work. The easy option is to make use of a cab company who runs vans and busses and has agreed to a discounted price to do this for us. 

Problem is this apparently becomes a taxable benefit to the employees that ride. This tax would eat up a lot of the current after tax wage.

What senario would result in a group shuttle service where the employees are not driving themselves and the ride does not result in a large taxable benefit being assesed. (Pickup @0445 hrs, a 12 hr work shift and drop off at 1915 hrs makes too long of a day and is just not safe for us to be the drivers.)

Does the company need to buy and maintain its own vehicles and hire its own drivers? Do we finally need to drive the bus ourselves? I really hope there is a solution where the shuttle service can be contracted out.

Any advice?


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## cardhu (May 26, 2009)

upstream said:


> This tax would eat up a lot of the current after tax wage.


You're exaggerating ... it would eat up only a tiny slice of current after-tax wages ... but taxes are not your only cost... if you were to forego the shuttle and drive yourself to work every day, you would incur expenses ... both direct (fuel) and indirect (wear & tear on vehicle, maintenance, insurance, etc.) ... of course, you could arrange to car-pool with some buddies to minimize that cost, but you can't reduce it to zero ... at the end of the day, if the tiny slice of your after tax wage lost to tax is still less than your expense for commuting on your own, then you're further ahead taking the shuttle.

I'd say accept the ride as offered. The key word in "taxable benefit" is "benefit".


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## MrMatt (Dec 21, 2011)

I know some of the automakers help arrange carpools by providing passenger vans with a 11-15person capacity. 
I think the company leases/rents them to the driver who is then responsible for maintaining them. Which means the driver isn't saddled with the $20-40k vehicle liability.
Hiring the driver is a big cost here, but split between a full bus the per person cost is quite a bit lower.

What are your other options? Driving yourself at a cost of $30-40/car, or $70+/truck per day

Maybe this job isn't a good fit for so many people living so far away, particularly if you don't think you can drive yourself safely.


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## MoneyGal (Apr 24, 2009)

upstream said:


> What senario would result in a group shuttle service where the employees are not driving themselves and the ride does not result in a large taxable benefit being assesed.


You can have this be a non-taxable benefit if the employees organize, provide and pay for the service without the involvement of the employer. Then you'd be paying for it with after-tax dollars, as opposed to having it paid for you and be taxed on the value.


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## upstream (Mar 22, 2012)

Well I've been studying up on it for a bit now. The people at the CRA were really helpfull too. The following related CRA documents were helpfull too. "Employers’ Guide
Taxable Benefits and Allowances" ( http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-11e.pdf ), and a variety of CRA interpretation bulletins related to group employee transportation.

There are a lot of considerations, but it seems considerations such as "remote area" (over 80km), the fact we are deemed essential services employees under legislation, the class of vehicle used, who owns / drives it and how many use it, if it is company specific or a service available to the public, etc all change the outcome. Bottom line is that the CRA, once you finally get passed up the supervisory chain a bit are very helpful in trying to describe the boundaries that a solution must fall into to qualify as non taxable benefit. They are even willing to come to the facility and view the situation before making thier determination if it comes to that. It wouldn't I don't think. I was supprised at the level of co-operation. I guess I just assumed they were against trying to help you find ways to make use of the web of tax laws and rules to save taxes, but the opposite seems true.

As for the cost. The discounted rate for door to work and back is $350 per day (4 one way trips.) There are up to 18 people who would use it (about 40% of people on shift) the rest choose to live in the countryside or in villages nearer to the plant. Of those people 6 would be picked up allong the way so would have shorter trips. There are four crews and depending on vacation, sickness, special projects, the particular crew etc there may be between 0 and 6 people on at a time. The anual wage for the riders vary from $50,000 to $100,000. The after tax cost using the CRA's $0.53 / km is very near $20,000 per year. (CRA's reasonable cost) I'd have to earn $28,000 to pay for it. So it is not an exaggeration at all to say it would be a huge slice of the wages. For myself there is only one other person with which to car pool some of the time currently, but given inexpensive transportation there would be 5.

Turnover where I work, including retirement, has averaged 25% over the last 5 years. Most the turnover is in the young newbies. Still we are loosing experience to say the least. The location is a big part of that. I'm interested in retention of employees, not least of myself.

As for the job itself, we are in a somewhat limited market. You would be right in saying there are places I could move too and work that are cheaper to get to and with good pay down the road, but the many years of work I have toward my current position would be lost. The vacation hours per year I now enjoy would be slashed, etc.

I live in a village close to where I work which already has free (non taxable) transportation. But with having a family now, it is not liveable.

I've now been in contact with companies who do transport thier employees in the manner I'm suggesting. So It is doable. I'm closer to understanding the details of how.

Thanks MrMatt for the car dealer idea. I wasn't aware and will contact a few tomorrow to see what they can come up with.


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## MoneyGal (Apr 24, 2009)

Upstream: thanks for coming back and updating the thread. It's been a while since I looked at taxable benefits rules -- I had either forgotten about, or never knew in the first place, the rules w/r/t employees working in remote locations. I'm also glad you got a positive response from CRA. Your experience with them is similar to mine - I think CRA unfairly gets a "bad rap" a lot of the time. Good luck in your efforts to find a solution!


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