1. What is Right of Use Value?

The Right of Use Value represents the taxable benefit an employee receives from the personal use of a company-provided motor vehicle. It's calculated based on the annual lease value of the vehicle and the percentage of personal use.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Annual Lease Value — The estimated annual cost to lease the vehicle (in dollars)
• Usage Percentage — The percentage of vehicle use that is personal (0-100%)

Explanation: The calculation determines the taxable portion of the vehicle benefit based on personal usage.

3. Importance of Right of Use Calculation

Details: Accurate calculation is crucial for tax compliance, proper employee compensation reporting, and avoiding penalties for underreporting taxable benefits.

4. Using the Calculator

Tips:

• Enter the Annual Lease Value in dollars (without commas)
• Enter the Usage Percentage as a number between 0 and 100 (without the % sign)
• Both values must be positive numbers

5. Frequently Asked Questions (FAQ)

Q1: How is Annual Lease Value determined?
A: It's typically based on the vehicle's fair market value at first use, with standard IRS tables providing lease values.

Q2: What if the vehicle is used both for business and personal purposes?
A: Only the personal use percentage should be included in the calculation. Maintain accurate mileage logs to support the percentage.

Q3: Are there alternative calculation methods?
A: Yes, some jurisdictions allow the cents-per-mile method or flat-rate methods as alternatives to the lease value method.

Q4: How often should this calculation be performed?
A: Typically annually, though more frequent calculations may be needed if usage patterns change significantly.

Q5: Does this apply to all company vehicles?
A: Generally yes, though there may be exceptions for certain types of vehicles or special use cases.