The personal use of company vehicles is a standard practice for most businesses with a fleet. In fact, it’s generally presented as a perk. Why purchase and maintain a personal vehicle when you can use your work vehicle?

However, there are several major issues with the personal use of company vehicles.

Personal use of a commercial vehicle is regulated in terms of Hours of Service, and drivers must meet certain criteria such as a maximum of 75 km of personal conveyance per day.

In Canada, the personal use of a company vehicle is considered a benefit of employment. This means it must essentially be treated as a taxable fringe benefit, based on the value of the vehicle’s use to the employee.

In addition, numerous insurance and liability concerns come into play whenever an employee takes the wheel of a company vehicle for personal use. These concerns will vary depending on location and whether the vehicle is owned or leased.

Defining ‘personal use’

Most people have at least a vague idea of what the terms “personal use” and “company vehicle” mean. Insurers and those who regulate vehicle operation apply specific, detailed definitions of both terms.

In Canada, “personal driving” must be treated as a taxable benefit when driving a company vehicle under the following circumstances:

• Vacation trips;
• Driving to conduct personal activities;
• Travel between home and a regular place of employment, other than a point of call; or
• Travel between home and a regular place of employment even if you insist employees drive the vehicles home, such as when they are on call.

Canada defines a “regular place of employment” as “any location where your employee regularly reports for work or performs the duties of employment.” Examples include:

• The office where your employee reports daily;
• Several store locations that a manager visits monthly;
• A client’s premises where an employee reports every day for a six-month project; or
• A client’s premises where an employee must attend biweekly meetings.

Allowances for commercial drivers

There are exceptions. For example, commercial drivers can drive a certain distance for personal use without counting the time against Hours of Service limits or treating the travel as a taxable benefit.

This personal use of the vehicle is commonly referred to as personal conveyance. It’s not tracked as on-duty and driving time if the following conditions are met:

• The vehicle is not used in the course of the motor carrier’s business;
• The vehicle has been unloaded;
• Any trailers have been unhitched;
• The distance traveled does not exceed 75 km in a day;
• The driver updates the Record of Duty Status to include the odometer reading at the beginning and end of the personal use; and
• The driver is not the subject of an out-of-service declaration.

Tips when allowing personal use

We have five main tips if your drivers use company vehicles for personal use.

Make sure all vehicles are tracked — Your business can’t effectively deploy and manage a consistent and correct policy for the personal use of a company vehicle without complete, accurate, timely information about every company vehicle and where they are.

Put a formal policy in place — Your policy should address the taxable benefit implications for employees, the liability the company and drivers take on when using a company vehicle for personal reasons, and clear expectations for drivers when using the vehicles for personal use.

Work with legal advisors to ensure that your policy meets or exceeds the requirements wherever your business has employees and uses company vehicles — Then, make sure every understands the policy. Also, ensure the policy is reviewed at least annually, and update or revise it as changing business conditions or local regulations dictate.

Check with your insurance provider to see if personal trips are covered under your policy — There are numerous insurance and liability concerns that come into play whenever an employee takes the wheel of a company vehicle for personal use.

Document everything — Your policy for personal use of a company vehicle should be captured and disseminated everywhere your business does business.

Personal use of a company vehicle is a benefit drivers appreciate. It can improve job satisfaction, and even help raise workplace morale. But a clear personal use policy will help reduce liability and clarify expectations for everyone involved.