When That Ferrari Isn’t Really a “Company Car”: Lessons from Placement PCD inc.

1. What Happened?

On 28 April 2025 the Court of Québec decided Placement PCD inc. et al. v. QRA, 2025 QCCQ 1391. The corporation had bought and maintained several high-end vehicles—think Ferraris, Lamborghinis, and a Corvette—claiming they boosted market credibility and served as “promotional” assets. It tried to deduct roughly $300,000 in costs and, at the same time, argued that no taxable benefit arose for the shareholder who could drive them.

The court took a very different view:

• Deductions denied. Promotional claims were “minimal or nonexistent.” Only one documented ride-and-drive event occurred, with a single guest.

• Taxable benefits assessed. Because the cars were “continuously available” to the shareholder—and no mileage logs or restrictions proved otherwise—the court added about $640,000 in standby-charge and operating-cost benefits under Québec Taxation Act §§ 117, 41, 41.0.1 (mirroring ITA 15(5) and Reg. 1(1)(e), (k)).

• Below-market sale adjusted. A 2012 Corvette was sold to the shareholder for $12,000 and flipped 76 days later for $149,468. The court treated the $137,468 spread as an additional shareholder benefit (Québec § 111; ITA 15(1)).

• Penalties mixed. Gross-negligence penalties on the benefits were upheld, but penalties on the expense deductions were cancelled—the idea that luxury prizes might motivate staff was “incorrect yet not implausible.”

2. Why Business Owners Should Care

1. Availability, not usage, drives benefits. Even if you rarely drive that sports car, simply leaving the keys within reach of a shareholder can trigger a full standby charge each month.

2. Burden of proof is on you. Detailed mileage logs, signed policies restricting personal use, and evidence of real promotional events are essential. Absence of paperwork equals tax pain.

3. Fair-market-value matters. Selling corporate assets to insiders below market price will be grossed up to FMV—and the CRA (or Revenu Québec) may still add penalties.

4. “Marketing” needs substance. Sponsorship decals, social-media posts, and documented ride-and-drive events help, but they must be significant and frequent enough to show a true business purpose.

5. Penalties sting. Where facts clearly point to personal use, courts are comfortable upholding gross-negligence penalties—twenty-five percent of the unreported benefit federally, plus provincial parallels.

3. Practical Checklist Before Your Company Buys a Luxury Vehicle

Step	Action Item	Why It Matters
1	Draft a written policy limiting personal use to zero or a clearly tracked number of kilometres.	Reduces standby charge exposure.
2	Implement an electronic or logbook system—odometer reading at start/end of every trip.	Evidence beats anecdotes.
3	Document every promotional event: guest lists, photos, invoices, social-media posts.	Proves business intent.
4	Review FMV before any asset transfer to shareholders or employees.	Avoid hidden taxable benefits.
5	Revisit the numbers annually with your tax advisor.	Limits surprises during an audit.

4. Alternatives to Consider

• Car allowance or per-kilometre reimbursements. Simpler to administer; the deduction equals the allowance, and taxable benefit issues largely disappear.

• Short-term rentals for promo events. You get the “wow” factor when needed without year-round standby charges.

• Leased vehicles with strict usage clauses. Leasing caps capital-cost allowance issues and may ease resale questions.

5. Key Takeaway

Luxury vehicles can be powerful branding tools—but only if the tax groundwork is solid. Without airtight documentation, the CRA (and provincial counterparts) will likely view that supercar as your personal toy, not a company asset.

When in doubt, talk to your CPA before you take the keys. It’s much cheaper than fighting a six-figure reassessment two years later.

This article provides general information only and does not constitute professional advice. For guidance tailored to your circumstances, speak with a qualified tax advisor.