OTTAWA, Ont. –As tax time approaches, truckers should remember a key change to the meal tax deduction limit that took effect early last year.
Scott Taylor, vice-president of operations with Transport Financial Services, reminds professional drivers the deduction limit was increased from 50% of $51 per day ($17 per meal) to 60%, beginning March 19.
For a long-haul truck driver on the road 250 days per year, the 10% increase could result in about a $380 tax return increase, Taylor points out. No small amount, since it goes straight into your pocket.
While the mid-year rule change would seem to cause confusion, Taylor pointed out Revenue Canada has simplified the tax filing process by creating two different areas for meal tax claims on the TL-2 form. There’s now a section for meals purchased pre-March 19 and a separate entry area for meals post-March 19.
However, it does get more complicated when trying to determine which meals qualify for the 60% deduction limit if a driver is not operating long-haul exclusively.
“Just because a meal was purchased after March 19 doesn’t mean it’s automatically 60%,”Taylor explains. You see, the meal tax deduction limit was only increased for long-haul drivers. By Revenue Canada’s definition, a long-haul truck driver must be away from home for 24 hours at a time, or longer. If a driver is doing local runs and returns home at the end of his or her shift, meals purchased after March 19 still only qualify for a 50% deduction limit.
“That’s where it’s going to get pretty confusing.”
Revenue Canada does its best to explain the changes on this year’s TL-2 form. Taylor urges all drivers and owner/operators to read the form carefully.
They should also read the section that addresses other changes for the 2007 tax year. Those changes can also be viewed online by visiting Canada Revenue Agency’s Web site at www.craarc.gc.ca. Under the heading ‘Individuals,’ select ‘2007 Tax Package’ and then your province for the latest updates.
Professional drivers may also want to consult a tax professional who’s familiar with the business. Taylor warns that Revenue Canada is taking a closer look at meal claims and the number of audits has skyrocketed in recent years.
“They’ve increased the rates, but they’re also watching it more closely,” Taylor says. “There have been more audits on meals in the last two years than I’ve ever been aware of before. It’s gotten a lot of attention from Revenue Canada.”
Anecdotally, Taylor says readers of his monthly column in Truck News and his existing client base have been reporting an increasing number of meal audits. So it’s more important than ever to have all your ducks lined up before filing, especially in light of the recent changes, he warns.
Using the simplified method of filing using your logbook remains the easiest way for do-it-yourselfers to file their own taxes. But they must be organized, particularly if they run both local and long distance. Taylor suggests reading up on the changes carefully.
spend the time to educate themselves,” he suggests. “If they think it’s the same-old, same-old, it certainly is not. There are more questions on the TL-2 forms, specifically that employers are supposed to fill out. There are also a bunch of new tax deductions and tax credits available this year, and people want to make sure they don’t miss any of them.”
The extra money will undoubtedly be welcomed by qualifying drivers and owner/operators, but it gets better. The meal tax deduction limit was increased to 65% beginning Jan. 1, 2008. So next year, drivers should enjoy an even greater return. It’s all part of the feds’ pledge to return the meal tax deduction limit to 80% by 2011.
‘There have been more audits on meals in the last two years than I’ve ever been aware of.’