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What is the taxable benefit on the company car?
A standby charge of 2% of the car's cost per 30-day period — or two-thirds of the lease — plus 34¢ per personal kilometre for 2026, reduced when personal driving stays under 1,667 km a month.
When the corporation owns or leases the car you also drive personally, you receive a taxable benefit: one charge for having it available and another for the personal kilometres. Enter the year and both appear, with the CRA worksheet’s own arithmetic beside them.
Enter the car and the year’s driving, and both halves of the benefit appear here with the arithmetic behind them.
How it is worked out
Two benefits, and the relief between them.
The letters below are CRA’s own, from the worksheet in chapter 2 of the employers’ guide, so the result can be checked against the guide line by line.
The standby charge — availability, not use
2% of the car’s tax-included cost for each 30-day period it was available (A × B), or two-thirds of the monthly leasing cost for a leased car. Days available are divided by 30 and rounded to the nearest whole number when the result is over one. A car parked in the driveway all year is still available all year. CRA: automobile provided by the employer · 2026.
The reduced standby charge — three conditions, all required
The employer requires the car for the job; more than 50% of the distance driven is business driving; and personal driving is at or under 1,667 km per 30-day period, which is 20,004 km across a full year. The charge is then prorated by personal kilometres over that limit (C × E ÷ D). Fail any one and the whole charge comes back — the calculator says which one, and why.
The operating expense benefit
34¢ for every personal kilometre in 2026, or 31¢ for someone employed principally in selling or leasing automobiles. Where a standby charge is included and the car is used more than 50% for employment, the employee may elect half the standby charge instead — in writing, before the end of the year. A reimbursement paid within 45 days of year end reduces the benefit. Finance Canada: 2026 expense benefit rates.
What this does not account for
- It does not produce or file a T4. These are the two amounts a T4 would carry. LedgerLodge has no payroll engine, no source deductions and no remittance schedule, and it does not file anything.
- It does not tell you which method is better. Whether the corporation should hold the car at all, against reimbursing a personal car by the kilometre, depends on the price, the driving split and the province. That is a decision for a CPA and it is worth taking once.
- It does not check the written election. The optional half-standby method needs notice to the employer before the end of the year. This page applies the arithmetic; whether the notice was given is a fact about your year.
- A vehicle that is not an “automobile”. A pickup or van used mostly to carry goods or equipment can fall outside the standby charge and into a different, per-kilometre calculation. This page assumes an automobile.
- The GST/HST the corporation owes on the benefit. An employer that provides a taxable automobile benefit is treated under the Excise Tax Act as having made a supply, and remits GST/HST on the benefit through its own return. That is a second figure, on a different form, and this page does not compute it.
- The corporation’s own deductions. The standby charge is the employee’s benefit. What the corporation may deduct for the car — lease capped at $1,100 a month, interest at $350, capital cost allowance on a ceiling of $39,000 — is a separate calculation.
Rates and rules as they stand for the 2026 tax year, checked against the CRA and Finance Canada sources linked above, each on or since 14 September 2026. The prescribed per-kilometre rate is announced each January for the named year and is never carried forward.
Questions
About the company car benefit.
How is the standby charge calculated?
2% of the cost of the automobile, including GST/HST and PST, for each 30-day period it was available to the employee. A $35,000 car available all year is twelve periods, so the charge is $8,400 before any reduction. For a leased car it is two-thirds of the monthly leasing cost, including taxes and a prorated down payment but excluding liability and collision insurance.
When does the reduced standby charge apply?
Three conditions, all of which must hold: the employer requires the automobile to be used in the course of employment, more than 50% of the distance driven is business driving, and personal driving is no more than 1,667 km per 30-day period — 20,004 km in a full year. The charge is then prorated by personal kilometres over that limit.
What is the operating expense benefit rate for 2026?
34¢ per personal kilometre, and 31¢ for a person employed principally in selling or leasing automobiles. Finance Canada confirmed both unchanged for 2026 in its January 2026 release.
Can the operating benefit be half the standby charge instead?
Yes, where a standby charge is included in the employee's income, the automobile is used more than 50% in the course of employment, and the employee told the employer in writing before the end of the year. The benefit is then half the standby charge before reimbursements. On heavy personal driving that is usually the cheaper method, which makes it a December decision rather than a March one.
Does commuting count as personal driving?
Yes. Travel between home and a regular place of work is personal driving, and it is what most often pushes a car over the 1,667 km-a-month limit and out of the reduced standby charge. Only travel in the course of employment counts as business driving.
Do reimbursements reduce the benefit?
Yes. Amounts the employee reimburses for the standby charge are subtracted from it, and amounts reimbursed for operating costs are subtracted from the operating benefit — but only if they are paid within 45 days of the end of the year.
Is it better to keep the car personally and claim mileage?
Often, for a single-owner corporation. A personally owned car reimbursed at 73¢ per business kilometre gives the corporation a deduction, the owner no taxable benefit, and a recoverable GST/HST fraction — with no fuel receipts to keep. Which is better depends on the price of the car, the business and personal split, and the province, and it is a decision worth taking once with a CPA.
The benefit is only as good as the logbook.
Both halves of this figure rest on one number: personal kilometres, counted for the whole year. A benefit computed from a figure nobody wrote down is the figure that gets adjusted on audit. LedgerLodge keeps the logbook per vehicle per year, with the odometer readings, and exports it as the document an auditor asks for.