Reducing tax deductions at source on automobile or motor vehicle allowances

In many cases, allowances that are not based only on a reasonable per-kilometre rate can later be substantially offset by the employees' expense deductions on their income tax and benefit returns. In these situations, employees can ask to reduce their tax deductions on their remuneration by filling out and sending in a Form T1213, Request to Reduce Tax Deductions at Source, or a written request to any tax services office along with the following information:

  • the type of employment for which the employee will receive the allowance
  • an estimate of the total vehicle allowances the employee will receive in the year
  • an estimate of the business kilometres the employee will drive in the year
  • an estimate of the employee's vehicle expenses for the year
  • the amount for which the employee is requesting the waiver

If you have a number of employees in the same situation, you can get a bulk waiver for the group. This way, every employee does not have to make an individual request.

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