New Banking Regulations Put Truckers in a Tight Spot
August 1, 2003
Dear Editor,I am writing out of frustration, having just experienced the new reg's in place by Canadian banks, which are going to severely damage the independent truckers in this country.These rules h...
I am writing out of frustration, having just experienced the new reg’s in place by Canadian banks, which are going to severely damage the independent truckers in this country.
These rules have been in place about three to four months, so few of us have run into them yet, but we all will soon enough.
As you know, we have been writing meals off as part of our corporate expense these last few years for the additional tax break, therefore not claiming them on our personal taxes.
Well, as of just recently, the banks are no longer allowing this write-off corporately to be calculated in when considering your debt ratio for mortgage lending, etc.
In fact, your tax form submitted to the government is now the only document they will consider for lending, thus any and all write-offs will now reduce your income for loan considerations.
This new procedure is in place by at least two banks for sure, RBC and CIBC, and they say it is industry-wide.
This move is not aimed at truckers, according to the bank, but who else writes off meals like we do, who else leaves substantial moneys in their companies for truck purchases? (No other industry or business has to totally recapitilize their equipment every four years or so.)
That’s right sir, even money you leave in your company and pay taxes on does not get considered since it does not show on your personal income tax.
I have learned all this because my wife and I recently put our house up for sale to buy a new house, our grandchildren have moved in with us to stay and we need a house more conducive to younger children.
Our present mortgage with the Royal Bank is in good standing, in fact.
We have three years of corporate books showing increased profit every year and increased income as well.
According to our mortgage specialist, we could not even qualify for the mortgage we have now, under the new reg’s.
We are responsible, hard-working people who have never missed a truck payment or anything else, for that matter.
We were looking for 70 per cent mortgage funding.
We showed $42,000 income between us, plus left $20,000 in the company, even after all the write-offs, and we still can’t qualify for this kind of mortgage, not even the one we have.
They (the banks) are terrified of the industry, so it seems, and are going to do nothing to encourage the industry’s independents.
Nothing we can do, as usual, but I sure would like to see some heat turned on these institutions that get government security, no competition from outside interests, make huge profits, but unless you’re Galen Weston, your company is not getting dime one from them. Just thought you might be interested. I’ll bet you will be hearing more about this kind of thing as time goes by.
Ron and Pat Ross
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