TORONTO, Ont. – As the saying goes, death and taxes are both inevitable, but a good accountant can save you lots of trouble (and money) in this world anyway.
The reason truck drivers need accountants is because they are truck drivers. Most should stick to driving and let a professional prepare their taxes.
“You’d be surprised at the number of truckers who don’t know how to apply for a GST number,” says Paul Knibbs, owner of Truckers Business Consulting Group in Surrey, B.C.
Another problem, he says, arises when truck owners miss the annual deadline and neglect to file a tax return. One year rolls into the next and the same thing happens the following year.
“Unfortunately,” says Knibbs, “Revenue Canada will only let you claim GST for up to four years. So an owner/operator who has neglected to file for a decade could be out around $30,000 in GST rebates alone!”
Filing quarterly is a good idea, he says. Otherwise, your GST rebate will be sitting dormant for a year.
Meal expenses are a major concern with truck drivers of all stripes, whether they are T-4’d company drivers, sole proprietors, or incorporated owners. Currently the government allows company drivers to claim $15 per meal, up to $45 a day without receipts, but you must submit a TL2 form.
That figure can be upped to US$15 per meal when you cross the border (about $52 a day as the Loonie flies). If you’re claiming U.S. meals it’s important to document when you cross the border and how much time you spend stateside.
And Knibbs suggests owner/operators should even be able to claim a per diem of $70 without receipts, basing his figure on what auditors at Revenue Canada are currently allowed (without receipts).
“When Andre Oulette (president of Canada Post) says he should be allowed to claim $2 million on the honour system, what does that say to the rest of us?” asks Knibbs.
“A truck driver has to eat every day, just like an auditor.”
“People shouldn’t be afraid of Revenue Canada,” he adds. “It comes down to being reasonable, as long as you’re not being fraudulent by under-reporting your income or inflating your expenses.
(That said, truckers should also be aware that if Revenue Canada doesn’t agree with their expense claims, their refunds can be clawed back, potentially with interest.)
Knibbs also thinks that some amount of on-road entertainment expenses can be claimed. “If a driver stops to buy a CD, why shouldn’t it be allowed as an incidental expense? You may not get everything you claim, but you’re not going to get what you don’t ask for.”
An owner/operator, whether a sole proprietor or incorporated, is considered a small business. This allows him or her to claim a wide spectrum of expenses, from paper towels to truck washes to parking fees. Ben Patey, owner of Alpha and Omega Accounting and Tax Services in Dartmouth N.S. explains some of the write-offs in more detail.
“Truck repairs, insurance, licence and registration fees, accounting fees and financing or leasing costs, capital cost allowance may be claimed, as can other business costs such as wages paid to employees and office expenses,” says Patey.
“Depending on the circumstances, some business use of the trucker’s home may also be claimed. This may include rent or mortgage interest, home insurance, certain repairs and maintenance, heat and electricity, and a portion of property taxes where applicable.”
But the pitfalls are many. According to Doug Carmichael (owner of D.W. Carmichael, a tax consulting firm in Brampton, Ont. specializing in truck drivers), one common mistake occurs when owner/ops put their spouse on the payroll as a bookkeeper. This may raise the eyebrows of Revenue Canada, because the wife (in this case) might be seen as a non-working employee.
The solution is simple, says Carmichael. “Put the company in the wife’s name and pay the husband/driver as a salaried employee.”
If you’re employing your kids to wash and clean the truck and paying them a salary, you must be able to show an auditor what work they have done and when they have done it.
Keep a log of their activities and this must be evidenced with a T4 at the end of the year.
“You can claim what you want but it has to be incurred as an expense or a consumable, and must be tied back to earning an income,” says Carmichael.
Another mistake often made by owner/operators happens when paying cash for goods or services and failing to keep a receipt. This includes Interac purchases, which are the equivalent to paying cash. Staple the invoice or bill to your Interac receipt and you’ll be able to show specifically what you spent your money on.
Lastly, finding a good accountant is like finding a good mechanic. They’ll save you tens of thousands of dollars over the course of your career. Once you have found one never let them go.