Company car taxable benefit calculator
Reviewed by EverStone CPA · July 2026
Quick answer: A corporation-owned vehicle creates a taxable benefit on your T4. Estimate both parts of it before you buy the car, not after.
Estimates for general information — not tax advice specific to your situation. Rates and rules change and your result depends on details a calculator cannot capture. We confirm the numbers for your circumstances in a free consult.
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What taxable benefit goes on the T4 for an employee or owner driving a company-owned vehicle?
Any corporation with a vehicle in the company name — one of the most commonly reviewed items in a small-business audit. It models an owned vehicle. A leased vehicle uses a different standby charge calculation.
A worked example
These are the numbers already in the calculator above, so you can follow the arithmetic against the result it is showing.
| Step | Figure |
|---|---|
| Full standby charge | 2% × $55,000 × 12 months = $13,200 |
| Business use | (30,000 − 8,000) ÷ 30,000 = 73% — above the 50% test |
| Personal km test | 8,000 is below 1,667 × 12 = 20,004, so the reduction applies |
| Reduced standby charge | 8,000 ÷ 20,004 × $13,200 = $5,279 |
| Operating benefit | 8,000 personal km × $0.34 = $2,720 |
| Total taxable benefit | ≈ $7,999 on the T4 |
What it assumes, and where it stops
Every estimate rests on assumptions. These are the ones that would change your number most.
| Assumption | What it means for your number |
|---|---|
| A kilometre log exists | Every reduction above depends on personal and total kilometres. With no log, the CRA can assess the full standby charge — here, $13,200 instead of $5,279. |
| The vehicle is owned, not leased | A leased vehicle uses two-thirds of the lease cost rather than 2% of cost. |
| Both reduction tests are met | The reduced standby charge needs business use above 50% AND personal kilometres under 1,667 per month. Failing either gives the full charge. |
| The operating benefit has an alternative | Where business use exceeds 50%, half the standby charge can be elected instead of the per-kilometre rate — but the election has a deadline. |
General information, not advice. Have a CPA confirm it for your situation
Two benefits, not one
Putting a car in your corporation creates two separate taxable benefits. The standby charge is 2% of the vehicle's original cost (including GST and PST) for every month it is available to you — it exists simply because the car sits there for your use, whether you drive it or not. The operating benefit is 34¢ per personal kilometre for 2026, covering fuel, insurance, maintenance and repairs the company paid.
The reduced standby charge is the whole game
If business use is at least 50% of total kilometres and personal driving stays under 1,667 km per month (20,004 a year), the standby charge is prorated down by your actual personal use. Both conditions must hold. Miss either one — by a single kilometre — and the full 2% per month applies, which is why the benefit on a company car is so often larger than owners expect.
Before you buy the car
Run the number first. On an expensive vehicle with meaningful personal use, the taxable benefit frequently exceeds what you would have received as a per-kilometre allowance for using your own car — 73¢ for the first 5,000 km and 67¢ after that, paid tax-free to you and deductible to the company. That comparison, not the purchase price, is the real decision. The full guide to company cars
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Company Car Taxable Benefit Calculator FAQ
How is the standby charge calculated?+
What is the reduced standby charge?+
What is the operating benefit rate for 2026?+
Is a company car worth it?+
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Related reading
Guides and tools that go deeper on what this page covers.
Want these numbers confirmed for your business?
A free consult with a Fraser Valley CPA — we will check the figures against your actual situation and quote a fixed fee.