IRP offers solution for road builders
My dad loved my mom’s “Never Fail Bread.” Time after time, she could turn out a dozen buns that were light as love.
Then one afternoon he decided to give her recipe a try. The result wasn’t pretty.
My dad followed the instructions and had the right ingredients but didn’t realize you have to let the dough rise at least twice or else the bread will fall flat.
Sometimes you can have everything you need to solve a problem or make something great but miss the one crucial step or piece of information that brings it all together.
It’s like the feud over Saskatchewan’s regulation prohibiting construction vehicles from having Alberta license plates on new highway construction sites.
For road builders caught in the middle, there’s an easy solution and both provinces already have it on their books: the International Registration Plan.
IRP is an agreement among states and provinces that’s designed to help them collect and distribute registration fees. Alberta put the “I” in IRP because it was the first Canadian jurisdiction to join.
IRP is important because Alberta famously does not charge provincial sales tax yet Alberta carriers operating in Saskatchewan owe prorated sales tax on their equipment.
PST is a major source of revenue for Saskatchewan and they want to capture sales tax from Albertans who use their roads (and remove the incentive for people to stampede into Alberta to buy equipment and get their vehicles repaired, tax-free).
Inter-jurisdictional vehicles are exempt from PST but instead are subject to a Prorated Vehicle Tax (PVT), which is payable when you first register the vehicle and on each renewal of the vehicle’s licence under IRP. Your home jurisdiction will calculate and distribute the sales tax you owe to each province or state based on the distance the vehicle travelled there.
If you’re an over-the-road for-hire transportation company, you probably know all about IRP. But many private carriers like construction firms that temporarily use their equipment outside their home jurisdiction have never heard of IRP.
These types of companies have commercial vehicles but aren’t aware of all the rules for inter-jurisdictional carriers and how to comply. They may travel into another province for a job that last a few weeks-like a highway project-staying put in single location before coming home.
This triggers a need to pay tax on their vehicles. It can really add up.
Did you know you’re required to pay sales tax for temporary use of any commercial vehicle? Yup, even pilot cars and pickup trucks used in commercial operations. If you already have a fleet established, in most cases, IRP is the easiest way to make sure you’re paying the proper tax on these light-duty vehicles.
The best part about IRP is that you only pay for what you use! Without the prorating of IRP, chances are you’d pay too much sales tax under temporary use rules.
I can appreciate Alberta and Saskatchewan each wanting to collect what they’re owed. But when it comes to commercial vehicles used on road projects, we have all the ingredients we need for a “Never Fail” solution. We just need a dash of IRP.
– Sandy Johnson is the founder and managing partner at North Star Fleet Solutions in Calgary.
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