Company Car Taxable Benefit Calculator

How the calculation works

1. 1

   Enter the vehicle's cost

   Enter the employer's cost of the vehicle, including GST/HST, and the number of days it was available to the employee.

2. 2

   Enter personal kilometres

   Enter the personal (non-business) kilometres driven, used for the operating cost benefit.

3. 3

   Check the standby election

   If the employee uses the vehicle mostly for business, they may elect to use 50% of the standby charge instead of the per-km operating cost rate.

Calculation formula

Standby charge: 2% × vehicle cost × (available days ÷ 30). Operating cost: 34¢ × personal km (or 50% of standby charge if elected).

• •The 34 cents/km rate applies for 2026; automobile salespeople use a lower 31 cents/km rate.
• •A reduced standby charge formula applies if business use is over 50% and personal use is under 1,667 km/month -- not modelled here.

Worked example

An employee has a company vehicle costing the employer C$35,000, available all 365 days, driving 10,000 personal kilometres.

Standby charge

C$8,516.67

Operating cost benefit

C$3,400.00

Total taxable benefit

C$11,916.67

The standby charge (2% × $35,000 × 12.17 periods) plus the operating cost benefit (10,000 km × 34¢) give a total taxable benefit of C$11,916.67, reported on the employee's T4.

Company vehicle benefit components (2026)

Per Income Tax Act ss. 6(1)(e), 6(1)(k), 6(2).

Source: Canada Revenue Agency (CRA)

Eligibility

Vehicle provided by employer

The taxable benefit applies whenever an employer-owned or leased automobile is made available to an employee for any personal use.

Operating cost election

If the employee uses the vehicle over 50% for business and notifies the employer in writing by December 31, they may elect the 50%-of-standby-charge method instead of the per-km rate.

Frequently asked questions

How is the standby charge calculated?

The standby charge is 2% of the employer's cost of the vehicle (including tax), multiplied by the number of 30-day periods the vehicle was available to the employee during the year, under ITA section 6(2).

What is the operating cost benefit?

The operating cost benefit is the CRA's per-kilometre rate (34 cents/km for 2026) multiplied by personal kilometres driven, unless the employee elects to use 50% of the standby charge instead.

Is this benefit subject to CPP and EI?

The taxable benefit is pensionable for Canada Pension Plan (CPP) purposes, so both employer and employee CPP contributions apply, but it is not insurable for Employment Insurance (EI) -- no EI premiums are owed on it.

Can the standby charge be reduced?

Yes, if the employee uses the vehicle primarily for business (over 50%) and drives less than 1,667 personal kilometres per month, a reduced standby charge formula applies -- this calculator uses the standard, non-reduced formula.