Meal tax lawsuit on last legs

by Steven Macleod

SUMMERLAND, B.C. – After leaving the B.C. Supreme Court and the province’s Court of Appeal with distasteful results, a group of truckers are hoping for a supreme decision from Canada’s highest court.

The class action lawsuit filed against the Canada Revenue Agency (CRA) and related ministries is an attempt to get truck drivers the same meal allowance benefits as federal bureaucrats.

After being determined doomed to fail by Justice Alison Beames, the B.C. Supreme Court dismissed the plaintiffs’ claims on June 8, 2005. The B.C. Court of Appeal followed suit earlier this spring and now the truckers are travelling down a final route of hope to the Supreme Court of Canada.

“They’re not accepting the proposition that people that travel for a living need to eat,” said Tom Johnston, counsel for the lawsuit.

When Johnston, a lawyer with B.C.-based firm Johnston, Johnson and Co., first took up the case in 2002 truckers were entitled to claim 50% of $33 per day, while government employees were issued a tax-free meal allowance of $61.50 per day.

Truckers received a bit of a boost from the CRA and are now able to claim $45 per day in meal expenses; comparatively government employees are now dining on $75.40 per day.

“Since the initial lawsuit was launched in 2002, the meal allowance for truckers has been raised from half of $33 to half of $45 per day,” Johnston told Truck News. “That $22.50 is still taxable, so you end up with $10 or $11 each day.”

The 50% clause written into the Income Tax Act is one of the main points of contention in the lawsuit. Section 67.1 of the Act states that an amount paid for food or beverages shall be deemed to be 50% of the lesser of the amount actually paid and an amount that would be reasonable in the circumstances.

“It has been going since 1988 when the rule first came in, but it didn’t get bad until 1994 when the 50% rule came out,” noted Johnston. “We’re trying to get that rule struck down as unconstitutional.”

It’s noted in the plaintiffs’ claim that the 50% rule is unconstitutional as it discriminates against non-government workers. The lawsuit is challenging the discrimination based on the Equal Rights section of Canada’s Charter of Rights, which states that every individual has the right to equal benefit of the law without discrimination.

“The MPs get it, the judges get, there’s a wide range of people that get it. If I were to take you out to lunch, I would be able to make a claim on that,” explained Johnston. “There’s no doubt this is targeted at people who travel to make a living.”

In the judgment, Beames tossed aside the comparison of truck drivers to government workers as unrealistic.

“As the defendants’ counsel said in submissions, the plaintiffs are not just trying to compare apples to bananas; they are seeking to compare apples to monkeys,” she stated.

Beames went on to say that government employee benefits are achieved through a contract between the employer and employee. The terms of those contracts and its meal allowances do not entitle the plaintiffs to the same benefits, as those who are employed by different employers.

There are currently 2,160 Canadians involved in the class action lawsuit, with 11 people representing each of Canada’s provinces and the Yukon Territory. With approximately 300,000 truck drivers and transport workers across Canada, a positive decision from the Supreme Court of Canada could have far reaching implications.

“They’ll end up on the average with an excess of $10,000 a year in meals tax-free,” said Johnston. “If they had that $10,000 each year it would be more attractive to get new drivers into the industry.”

As well as seeking the same meal allowance rates as government workers, if successful the plaintiffs in the class action suit could be in line for some hefty back pay. As part of the suit the plaintiffs are seeking lump sum payments for all the meal tax money taken from the workers. Dating back to 1988, the amount could range between $20,000 and $40,000.

Before moving on to the Supreme Court of Canada, the plaintiffs have one more hurdle to cross with the B.C. Court of Appeal.

“We’re waiting for a decision from the B.C. Court of Appeal on costs,” explained Johnston during an August interview. “They’re seeking $11,000 in costs from the truckers. But we’re saying it’s in public interest and a national case so they should pay for the cost.”

History shows that truckers in the end will probably have to swallow their current situation as acceptable. According to Johnston there is only a 10% chance of winning the Supreme Court appeal, but many of the truckers are making their feelings known to government representatives.

“One of the things that has come from this lawsuit is a number of the people involved have formed a different group called Keep Canada Moving. They’re taking actions to lobby MPs to change the meal allowance rules of the Tax Act,” said Johnston.

The class action suit was Johnston’s first foray in the trucking industry. Initially seeking 500 people to join the suit, the response from the industry ended up with more than 2,000 workers joining in. Johnston said the whole experience has been an eye-opener and the plaintiffs came prepared to go through with it.

“These guys are like slaves; they work long hours. They don’t have any of the working rights most people have and the industry is going to pay for it,” he said. “It doesn’t seem right that a trucker who goes down to California to pick up a load of oranges doesn’t have that same privilege. If you’re a transportation worker you can’t help but think the fix is in.”

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