We all desire to simplify our busy lives in as many ways as we can. Remote controls, microwaves, cell phones, email ... the list goes on and on, but one thing that all of these have in common is they ...
We all desire to simplify our busy lives in as many ways as we can. Remote controls, microwaves, cell phones, email … the list goes on and on, but one thing that all of these have in common is they come at a greater cost than conventional methods.
Yes, many of these devices make our complicated lives easier and usually we can justify the increased expense, but when expense far outweighs benefit, most of us reject simplification in favor of saving our hard-earned money.
The Canada Customs and Revenue Agency (CCRA) has provided us with a “Simplified Method” of reporting our meal expenses on the “TL2 Claim for Meals and Lodgings” form, that we seem to be unable to resist.
As with all simplification tools, this method should be cost analysed. My experience has proven that most drivers using this method are giving away substantial tax deductions, without savings in time or effort.
We should ask ourselves this simple question: When has our tax collection agency ever given an advantage to the everyday working Canadian taxpayer? If your answer to this question is the same as mine … Never … you may want to consider changing methods.
The single factor making most drivers use this method is the elimination of the need to save receipts for meals. On the surface, this seems to be a huge advantage. However my experience, both personal as well as in my many dealings with truck driving clients, has taught me that the only drivers able to benefit from this so-called concession are the ones who do relatively short hauls. They barely qualify for the deduction and generally brown bag their meals, while still being allowed to claim all or part of the $33-a-day deduction.
We all know the percentage of highway drivers in this category is quite small, and of course so does the CCRA. In my opinion this is probably why it is willing to make the concession in the first place. It is simply a numbers game.
CCRA is willing to trade off the small percentage of claims advantageous to the taxpayer, for the huge benefit of an overwhelming percentage of lower claims made by drivers who think they are beating the system – or at least simplifying their bookkeeping.
For most highway drivers even those staying within our pristine country, $33 doesn’t cover the cost of meals for a 24-hour period. For the ever-increasing number travelling to the U.S., 33 Canadian bucks might as well be $33 in Canadian Tire money – it’s a terrible joke.
Since it is not a larger deduction keeping the bulk of truck drivers using the simplified method, it must be the belief that we are simplifying our bookkeeping.
To claim under the simplified method, we must provide details, including the number of trips, number of days for those trips, number of hours required for each trip, destinations (batched), number of meals allowed for these trips and the cost of those meals (at $11 per meal).
To come up with the information to complete the TL2 form usually takes considerable time spent pouring over a year’s worth of logbooks, which we must be able to provide the agency as justification for our claim. This legal requirement means we must keep all of our logbooks for a minimum of seven years. And for this benefit we are willing to trade keeping a large envelope of receipts, or better yet, two envelopes and taking an hour or two to figure out the totals before filing a TL2? Which way sounds easier to you?
Personally I don’t like the thought of keeping seven years worth of logs on hand.
As a tax preparer, I charge a basic preparation fee for forms required in the return if it is simplified for me, (i.e. summarized and tabulated). But if I have to go through logbooks to get the information, and/or do the adding, then I charge extra for my time. I know there will always be folks who insist on using the simplified method. If you’re one of them, there are a few things that have changed of late.
In 1999, Don Wilkinson of Winnipeg challenged the $33 per day amount allowed by CCRA under the simplified method, in Tax Court. He requested and got $40 per day in 2000.
During the proceedings, Judge Sarchuk observed there was no basis for the $33 in the Income Tax Act. Public servants are allowed $48 per day when travelling and he felt this was a more reasonable amount. Don’s appeal for $40 per day was awarded. He is in the process of appealing 1995, 1996, 1998, 1999 and 2000 as well, for $48 per day.
This decision and the judge’s comments should make all of you using the simplified method consider claiming $48 per day, rather than $33. That would include those who agree with my logic, but sadly, didn’t keep receipts for 2001.
– A professional truck driver since 1974, with over three million miles and several awards to his credit, Kent Bristo has been a tax consultant since 1978. He can be contacted by email at email@example.com or by phone at 613-487-9497.
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