January, 2004

TAX TREATMENT OF SUPPLIED EMERGENCY RESPONSE VEHICLES

from: Canadian Association of Fire Chiefs

Budget Provision

The February 2003 federal budget committed the Government of Canada "to introduce a new exclusion from the automobile definition for clearly marked police and fire emergency response vehicles. This change will exclude these vehicles from the provisions requiring the inclusion of a standby charge and operating expense benefit in the employee's income. This measure will apply to the 2003 and subsequent taxation years."

This commitment received Royal Assent in June 2003 and became law.

Definition of "Clearlv Marked"

On December 18 2003. CAFC received a statement from the Canada Customs and Revenue Agency detailing what is meant by the words "clearly marked" contained in the above-quoted budget provision. It states as follows:

"It is our general position that a fire or police emergency-response vehicle is considered 'clearly marked' when such a vehicle can be readily identified by the general public as a police or fire vehicle because of the symbols and/or lettering on the exterior of the vehicle. A police or fire vehicle that is only equipped with radios, computers and lights on the inside of the vehicle does not satisfy the requirement that the vehicle be 'clearly marked' ".