Personal Use Taxable Benefit: Finding an equitable balance
January 27, 2010
By Terri Houck
Supervisor/Technical Business Analyst
Driver and Vehicle Reporting Services
Personal use of company vehicles is a policy that should undergo review on a regular basis. One aspect of this policy is assessing the taxable benefit of personal use. Begin by considering the two biggest questions:
- Should I charge my drivers for the personal use of their company-provided vehicle?
- If yes, what should I charge my drivers for the personal use of their company vehicle?
The monthly driver charge-back is two-fold. First, to make sure the driver's tax liability is covered and secondly, to help offset your fleet expenses.
Your goal is to reach an equitable amount that benefits both the driver and the company. To do this, you'll need to look at your drivers' average percentage of personal use.
If the average percent of personal use per year is 10% and the average number of personal miles driven per year is 2,400 (24,000 x 10%) the taxable benefit amount would be calculated as follows:
24,000 miles per year with 10% personal use = 2,400 personal miles
Gas Benefit 2,400 x .055 = $132.00
ALV Benefit $5350.00 x 10 = $535.00
Total taxable benefit = $667.00
Deduct the driver's monthly contribution ($75.00 x 12 months) = $900.00
Net reportable benefit of ($667.00 - $900.00) = -$233.00
Note: this is a credit amount so the driver's taxable benefit is $0.00. The
In today’s environment, companies really should be charging for Personal Use. Most importantly, the amount charged should be at a rate that fairly compensates the company.