July 26, 1999

To:Audit Committee

From:City Auditor

Subject:Staff Car Allowance

Recommendations:

It is recommended that this report be received for information and forwarded to the Administration Committee.

Background:

At its meeting on March 1, 1999, the Audit Committee requested, "the City Auditor to clarify that senior staff cannot receive a car allowance and a full mileage allowance, and report thereon to the Audit Committee."

This report was prepared based on information provided by the Finance Department as well as discussions with staff from the Human Resources Division of Corporate Services and the Office of the Chief Administrative Officer.

Comments:

Employees who are required to use their personal vehicle in the conduct of City business are either paid a car allowance or can claim, at a prescribed per kilometre rate, for actual business kilometres travelled. Car allowances and the per kilometre reimbursement of business travel are presently being paid to staff based on the collective bargaining agreements or policies that existed in their former municipalities. Therefore, the amount of the car allowance varies from staff to staff, based on their position and amount of business travel. The per kilometre reimbursement rate ranges from $0.30 to $0.39, based on the specific rate(s) in effect in each of the former municipalities.

As a general rule, staff who receive car allowances are not entitled to a full metreage allowance. However, Public Heath Nurses and Building Inspectors from some of the former municipalities are paid a monthly car allowance and a reduced metreage rate (from $0.10 to $0.15 per kilometre), based on their respective collective agreements. Further, staff from the former City of Scarborough who receive a car allowance can also claim for business metreage for travel outside the GTA, at a reduced "out of town" rate of $0.10 per kilometre.

Finance staff advise that all car allowances are now paid through the payroll system and are considered as income under the Income Tax Act. The Chief Financial Officer and Treasurer recently advised all department heads that all metreage claims would be processed through the payroll system. The reimbursement of travel based on the actual business kilometres travelled is not considered a taxable benefit, provided the per kilometre rate is reasonable and is in line with Revenue Canada's prescribed rate.

Conclusions:

The Chief Administrator's Office, with the assistance of staff from the Building Division and Corporate Services Department, is working on a uniform vehicle assignment policy for management staff. In developing this policy, the use of metreage and car allowances will be examined along with various other options. Once a recommended policy has been established, it will be reported to the Administration Committee and Council for approval. The issues of metreage and car allowances for union employees are being addressed in the current collective bargaining process and will form part of the new collective bargaining agreements. The negotiated agreements will also be reported to Council for approval.

In the interim, staff will continue to be reimbursed in accordance with the collective bargaining agreements and or policies that were in effect in the former municipalities.

Contact Name and Telephone Number:

Tony Veneziano, Senior Audit Manager, 392-8353

Jeffrey Griffiths

City Auditor

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