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Tax tips that pay for truckers

TORONTO, Ont. - As the saying goes, death and taxes are both inevitable, but a good accountant can save you lots of trouble (and money) in this world anyway.

TORONTO, Ont. – As the saying goes, death and taxes are both inevitable, but a good accountant can save you lots of trouble (and money) in this world anyway.

The reason truck drivers need accountants is because they are truck drivers. Most should stick to driving and let a professional prepare their taxes.

“You’d be surprised at the number of truckers who don’t know how to apply for a GST number,” says Paul Knibbs, owner of Truckers Business Consulting Group in Surrey, B.C.

Another problem, he says, arises when truck owners miss the annual deadline and neglect to file a tax return. One year rolls into the next and the same thing happens the following year.

“Unfortunately,” says Knibbs, “Revenue Canada will only let you claim GST for up to four years. So an owner/operator who has neglected to file for a decade could be out around $30,000 in GST rebates alone!”

Filing quarterly is a good idea, he says. Otherwise, your GST rebate will be sitting dormant for a year.

Meal expenses are a major concern with truck drivers of all stripes, whether they are T-4’d company drivers, sole proprietors, or incorporated owners. Currently the government allows company drivers to claim $15 per meal, up to $45 a day without receipts, but you must submit a TL2 form.

That figure can be upped to US$15 per meal when you cross the border (about $52 a day as the Loonie flies). If you’re claiming U.S. meals it’s important to document when you cross the border and how much time you spend stateside.

And Knibbs suggests owner/operators should even be able to claim a per diem of $70 without receipts, basing his figure on what auditors at Revenue Canada are currently allowed (without receipts).

“When Andre Oulette (president of Canada Post) says he should be allowed to claim $2 million on the honour system, what does that say to the rest of us?” asks Knibbs.

“A truck driver has to eat every day, just like an auditor.”

“People shouldn’t be afraid of Revenue Canada,” he adds. “It comes down to being reasonable, as long as you’re not being fraudulent by under-reporting your income or inflating your expenses.

(That said, truckers should also be aware that if Revenue Canada doesn’t agree with their expense claims, their refunds can be clawed back, potentially with interest.)

Knibbs also thinks that some amount of on-road entertainment expenses can be claimed. “If a driver stops to buy a CD, why shouldn’t it be allowed as an incidental expense? You may not get everything you claim, but you’re not going to get what you don’t ask for.”

An owner/operator, whether a sole proprietor or incorporated, is considered a small business. This allows him or her to claim a wide spectrum of expenses, from paper towels to truck washes to parking fees. Ben Patey, owner of Alpha and Omega Accounting and Tax Services in Dartmouth N.S. explains some of the write-offs in more detail.

“Truck repairs, insurance, licence and registration fees, accounting fees and financing or leasing costs, capital cost allowance may be claimed, as can other business costs such as wages paid to employees and office expenses,” says Patey.

“Depending on the circumstances, some business use of the trucker’s home may also be claimed. This may include rent or mortgage interest, home insurance, certain repairs and maintenance, heat and electricity, and a portion of property taxes where applicable.”

But the pitfalls are many. According to Doug Carmichael (owner of D.W. Carmichael, a tax consulting firm in Brampton, Ont. specializing in truck drivers), one common mistake occurs when owner/ops put their spouse on the payroll as a bookkeeper. This may raise the eyebrows of Revenue Canada, because the wife (in this case) might be seen as a non-working employee.

The solution is simple, says Carmichael. “Put the company in the wife’s name and pay the husband/driver as a salaried employee.”

If you’re employing your kids to wash and clean the truck and paying them a salary, you must be able to show an auditor what work they have done and when they have done it.

Keep a log of their activities and this must be evidenced with a T4 at the end of the year.

“You can claim what you want but it has to be incurred as an expense or a consumable, and must be tied back to earning an income,” says Carmichael.

Another mistake often made by owner/operators happens when paying cash for goods or services and failing to keep a receipt. This includes Interac purchases, which are the equivalent to paying cash. Staple the invoice or bill to your Interac receipt and you’ll be able to show specifically what you spent your money on.

Lastly, finding a good accountant is like finding a good mechanic. They’ll save you tens of thousands of dollars over the course of your career. Once you have found one never let them go.

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21 Comments » for Tax tips that pay for truckers
  1. Van Deck Trucking LTD. says:

    What is wrong if my wife assist me as an Owner Operator to keep my books and paid a small amount for the trouble?

    • sheila says:

      nothing wrong with it as long as the spouse is actually doing the books, and you need a paper trail to prove you paid her,if you have a joint bank account write her a check and deposit it each month,that way no money has to change hands but it gives you a paper trail for CRA.hope this helps

  2. Dave Ainsby says:

    We used a new accountant and have had problems not had before. He based his accounting on “based on number of days with 12 hrs or more. Any days less than 12 are counted as half days”. We are long haul to USA and out for 3 wks home for 36 hrs in Winnipeg. Even our telephone bill has been queried by CRA, any thoughts.

    • sheila says:

      you must be away from home 24 hrs in order to claim 3 meals,you can also claim a shower in that time frame as well as lodging if you used if you are away from home for three weeks ,break it down into 24hr ,3weeks =21 days @3 meals a day =63 meals you can claim.your log book must reflect this time away from home ,not just time driving .and only a portion of your phone bill is a tax deduction. it sounds like your accountant is not up to date with truckers taxes,you may need to look for one that is .i hope this helps.

  3. Jason says:

    Any recommendations for companies with industry experience in BC ??

    • Brian says:

      Hi Jason, No worries…..We serve those in the trucking and logistics business. Both self employed hard working truckers and Companies across the province and Canada. Give us a call and we will guide and help you with your taxation. We’re right here in Delta/Surrey, BC and serve many truckers alike.
      Ray. (DBA OATAX.CA)
      604-5895911 / 1877-207-9738

  4. Gary says:

    I live in Ontario. Went and worked in Alberta for January-February 2016. Was away from my home for 64 days. Was reimbursed $960 meal money from my employer in Alberta. That was at a rate of $40 a day for 24 days. Am I allowed too claim 40 more days of meal money?

  5. Tracie says:

    As an owner/operator can you claim your truck payment minus your hst? My new accountant says we cant, it is a capital cost. It was always my understanding the truck payment could be written off as an expense…

    • Hi Tracie

      If you own the truck, the payment is not deductible, only the interest is. But you can claim a portion (30%) each year of the capital cost.

      If the truck is leased, you can deduct the entire truck payment.

      Since your payment includes HST, you likely are leasing the truck and 100% should be deductible.

  6. Jay says:

    Hi trying to decide if I want to incorporate or just go with an hourly position? I am not an o/o but the one company I am considering will only hire incorporated contractors to work with their equipment. They estimate anywhere between 800 to 1500 a week gross pay. The hourly position offers 21$ per hour min 40 hrs per week with company benefit program. Looking for advice Please!

  7. Joe Amelia says:

    Need help.
    I’m being audited by cra and they are telling me I am not allowed the standard meal deduction because I’m an owner operator

    Need information for who to contact I do not believe my account is up to date with everything
    I would like to be able to purchase a letter of opinion from a registered accounting firm that I’m willing to pay for to send in with my receipts
    Any info on who to contact would be greatly appreciated

  8. Peggy says:

    Would like to lease truck from company with option to buy what do I need to do to get started. For example accountant, deductions, what I can claim, paying one employee etc.

  9. Deep says:

    My husband have a incorporated company under which he gets paid from the company he works for. Can he claim his auto expenses and how much and how about the auto insurance???
    How much meals can he claim if doesnt keep his receipts.
    What other expenses can we claim?
    Please advise.

  10. TJ says:

    My company doesn’t charge me tax on some of the miles I drive truck for them. My employer said, that non-profit taxable income should be deducted from the meals and lodging expenses that I would claim on TL2. My question is would the whole non taxable income be deducted from my expense or part of it would?

  11. Mado says:

    I started working for a owner operator in March 2018 and get paid under my incorporation. He pays for my insurance, fueling, repairs, pretty much everything so is there anything I can claim to help my case? Meals , any bills? I have no receipts for meals though. Also he pays me 13% hst plus my flat rate and I heard from him and other drivers when I pay it back to cra I only pay 8% , anyone know about this or what it’s called if it exists?

  12. Anita Peitz says:

    Need advice,
    Hubby is a company driver, CRA sent a letter of review for employment expenses, he’s a long haul driver within Canada, all his trip sheets and receipts were sent to the supplementary tax office and they sent a letter back saying the following are not deductible other employment expenses: drivers medical, & commercial abstract work boots, safety vest cleaning supplies, basically in cab living expenses, Sirus radio subscription. Is this a new thing ? I called CRA and all the girl kept telling me was that tools cant be claimed because he’s not a tradesperson. Where do trucking companies get the list of tax write-offs for employee drivers. Any help would be greatly appreciated,

  13. Rachelle Caza says:

    Having same issue from CRA ,giving me a hassle this year about claiming truck cleaning supplies, drivers log books, GPS, shower toiletries, Sirius radio,dvd’s and Us cell phone ..taking it to appeal

  14. Michael says:

    Hello I am a Long Haul Can/Usa company driver, I am just wondering if there is any software or spreadsheet available to help keep Track of my time on each side of the border to better prepare for next years taxes as I am currently feeling overwhelmed trying to prepare this years taxes

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