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Tax Time: Avoid potentially taxing situations

WINNIPEG, Man. - It's that time of year again. For most, it's commonly known as tax time. But for Karen Graham, owner/operator turned carrier co-owner, it's time to prepare for battle.Her company, Gai...


WINNIPEG, Man. – It’s that time of year again. For most, it’s commonly known as tax time. But for Karen Graham, owner/operator turned carrier co-owner, it’s time to prepare for battle.

Her company, Gaia Overland, takes its name from the Viking ship used to carry the first Europeans to North America. And when it comes to holding the government accountable for money it owes her business and its employees, Graham attacks with the same Viking-style that made them among the most feared warriors of their day.

She is still embroiled in a dispute with the province over tax refunds her company is entitled to under the International Registration Plan.

She has also butted heads with the folks at Canada Customs and Revenue Agency (CCRA) – formerly Revenue Canada – from time to time. But no matter the opponent, she has a secret weapon (which always proves to be the deciding factor) and it may surprise you. It’s a tiny piece of paper called a receipt. And as tax time once again approaches, she is adamantly reminding her drivers to prepare their paper arsenal.

“We keep all records and we tell everybody to keep records because without it you go nowhere with the government,” says Graham from her office in Winnipeg, Man.

“Without records, I can’t have a scrap with Revenue Canada when they say ‘We’ve decided you can’t claim this,’ or ‘You claimed too much.'”

Meal allowances and currency exchanges seem to be gray areas often leading to discrepancies between Graham’s meticulously prepared tax return forms and what the CCRA deems fair. But Graham has yet to lose a single complaint when she has been properly prepared.

“When we have the evidence, we get it,” says Graham. “Begrudgingly, and slowly, but we do get it.”

With the 3,400-page Income Tax Act in a constant state of flux, even the most ardent do-it-yourselfers are advised to seek professional help when preparing a tax return. This especially holds true for owner/operators, who would have to spend more time behind their desk than in the cab to keep abreast of all the tax laws changes.

One company that specializes in income tax returns for truckers is Transport Financial Services (TFS), which has been operating out of Waterloo, Ont. for nearly 30 years.

Scott Taylor, TFS vice-president of operations, says the key to getting the most out of your tax return is to provide your accountant with all the necessary documentation.

“Truckers should have copies of all their financial contracts, bills of sale and lease agreements for all their equipment,” advises Taylor. “If they’ve been in business and have filed a tax return before, we need to see their prior year’s return.”

TMS offers a pre-paid, mail-in system and a toll-free phone number so truckers can file while on the road, leaving the accountant to fuss over the details.

Taylor says, while it’s useful for truckers to have a basic grasp of the tax-return procedure, it’s still worthwhile to consult a professional.

“Lots of people are getting more advanced at using computers or other systems at home, which is great for the basics,” says Taylor.

“But I think it doesn’t hurt to at least have someone at the end of the year, review what you’ve done and make sure you’re current for any changes in tax laws. It seems that every couple of years there’s a significant one or two that people need to be aware of.”

Kent Bristo is a tax consultant who calls the Ottawa valley home who has also coincidentally racked up more than three million miles behind the wheel.

He says it’s not uncommon for O/Os to undercut themselves by shelling out more money in taxes than necessary.

“I run into owner/operators every year who are using the TL2 form and claiming their meals on that, which is absolutely ludicrous,” says Bristo. “They should be filing those meals on their business forms.”

Something else to consider is whether all work-related expenses are being claimed, including cell phones and pagers that are necessary business tools.

Another advantage of working with a professional tax consultant is the opportunity to have them in your corner in tax court, should it become necessary.

“I’ve been to tax court a few times,” says Bristo, adding he isn’t afraid to go to bat for his clients.

In Edmonton, Alta., Canwest Tax and Business Consultants owner, Jim Lebrun, warns truckers to be wary of who they deal with when filing their taxes.

Not only do truckers have to worry about the CCRA trying to milk them, but some so-called trucking tax representatives will do likewise, he says.

“Some of these people who do truckers’ taxes should be in jail for fraud,” says Lebrun. “Some of these bookkeepers don’t even know how to depreciate a damned truck.”

The problem, according to Lebrun, is that anyone can claim to be an accountant without any formal training.

That makes it an attractive option to anyone with a phone and a calculator who’s looking to make a quick buck – potentially at your expense.

“You could get out of jail today and hang a shingle in the front window of an office and call yourself an accountant,” warns Lebrun. “Just because someone calls themselves a specialist doesn’t mean that they are.”

In fact, when Canwest takes on a new client, it is standard procedure to do a seven-year review of their taxes. So far, those reviews have revealed 92 per cent of the firm’s new clients have been overpaying in previous years.

“The cheap way usually turns out to be the most expensive way,” says Lebrun.

He echoes Graham’s advice and tells truckers to keep all receipts, citing his motto “There’s no defence for an unvouchered expense.”

He adds consulting a reputable truck tax company can result in a small windfall from often-overlooked sources of returns, such as off-road fuel taxes – a big one for Western log and oilfield haulers.

While many O/Os dread the prospect of filing their taxes, the professional tax advisors who make their living doing so insist there’s no reason to fear.

Just remember, if you’re going to take on the taxman in a high-stakes game of rock, paper, scissors, paper wins every time.


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