🚗 Taxable Benefits & Audit Risks: What Accountants Should Tell Their Clients

It all started with a routine audit…

Like many businesses before (and many more to come), my friend's company was selected for a standard review by Revenu Québec. They checked meal expenses, general deductions, and asked questions—nothing unusual. But then, they noticed an employee who kept their company car full-time. Curious, they dug deeper.

The result? $16,000 in unpaid taxes plus interest—all due to a taxable benefit that wasn’t properly accounted for. A costly oversight that could have been avoided with proper planning.

🏁 Why It Matters for Accountants

As an accountant, you probably already know how taxable automobile benefits work. But does every client in your firm understand the real financial consequences? Many business owners assume that as long as the company pays for the vehicle, they’re safe from personal tax implications.

In reality, a company car can be a ticking tax time bomb, especially if taxable benefits aren’t calculated in real-time.

🚨 Common Pitfalls Your Clients Might Overlook

• Misjudging Personal vs. Business Use – A company-branded vehicle might look like it’s exclusively for work, but tax authorities care more about usage than appearance. If an employee uses it outside working hours, it could lead to an audit red flag.

• No Record-Keeping – Without a daily or monthly log proving business use, your client could face taxable benefit adjustments during an audit.

• Late Taxable Benefit Calculations – If the business had correctly accounted for the taxable benefit when it was due, the employee wouldn’t have faced a lump sum tax hit plus interest years later.

🛻 And Those Fancy Company Pickups?

This is especially relevant for construction company owners who buy big, high-end pickups, thinking, “It’s the company that pays.” If the truck is also used for personal travel, it’s a taxable benefit—and tax authorities will eventually catch up.

🔎 How Accountants Can Help

• Educate your clients early – Help them understand the real cost of taxable benefits before they make big decisions.

• Encourage proactive tax planning – Getting ahead of taxable benefit calculations saves money and prevents surprises.

• Stress the importance of tracking usage – A simple mileage log can make the difference between a smooth audit and an unexpected tax bill.

💡 The takeaway? Even if a taxable benefit doesn’t feel like cash, it can have serious financial consequences if mishandled. The best way accountants can help? Make sure clients don’t learn this the hard way!

🔗 Want to dive deeper? Check out these official resources:

• Canada Revenue Agency - Automobile Benefits