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NB Telegraph-Journal ~ The Bottom Line ~ Truckers ~ April 3, 2006 - 09 Apr 2006 by TaxHelp
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While most employees are not entitled to claim specific expenses, there are some groups that are allowed to deduct costs they incur in helping their employers generate revenue. Today we are going to consider a select group that can deduct meals with a minimum of paperwork. These people work in the transportation sector.
As a preface, a person who drives a truck may not necessarily be a truck driver in the eyes of Canada Revenue Agency (CRA). The following deals with those who are employed by firms whose primary business is in the transportation of goods or people. For those who drive for other companies like manufacturers or retailers, the deductions are much more restrictive.
Truckers spend a lot of time on the road, often far away from home. The life may be lonely at times but, if you are a trucker, you may reap substantial benefits at tax time. Like other traveling employees, you can deduct meals purchased while on the road. But unlike other employees, you do not have to keep receipts for the meals you purchase, nor are you limited to the actual cost of the meal. This is referred to as the simplified method.
Of course, if you are driver who does not work for a firm whose primary business is in the transportation area, you may still claim for meals, provided you have the documentation to support the claim. This includes a statement from the employer that spells out your employment conditions on a T2200 declaration. Some transportation firms hire drivers from employment agencies before employing them directly. For those who receive a T4 from a personnel service the higher standard must be met according to current government requirements since the employment agency is primarily in the business of placing staff and does not literally derive their revenues from the transportation of goods. This is truly the case of something looking, swimming and quacking, while not being a duck.
As a qualified trucker, you can generally deduct $15 for each meal you purchase on the road, regardless of what it cost, to a maximum of $45 per day. However, you must keep a logbook of all of your trips. In lieu of receipts, the CRA requires you to keep track of the following information for each trip: the date and time you left, your destination (the farthest away point of your trip), the date and time you returned, the total number of hours away, the total kilometres traveled, and the total number of meals you actually purchased. If you are eligible to claim trucking expenses, you can ask your employer for Form TL2, which is also available from CRA.
Your employer must certify that you are qualified to claim the expenses by filling out the bottom part of the form and signing it. To claim your expenses, you must fill in the top part. The information required can be summarized from your logbook. For each destination, enter the total number of trips you made, the number of days spent on the road, the average number of hours per trip, plus the total number of meals you purchased. Your deduction is calculated as 50 per cent of the total amount claimed. If you had expenses for lodging while on the road, you may include these as well. The cost of motels or other items like showers is 100 per cent deductible, but in this case you must keep your receipts in order to make the claim. I should point out that if the expenses are incurred in the United States, the claim is still $15, but you may then convert it to Canadian funds and take the deduction.
The amount you claim for meals is dependent on the type of runs you drive. If you drive scheduled runs of ten hours or less during ordinary working hours, you may claim lunch but only if you actually bought it and if the run was not local. If you skip lunch, or "brown bag" it, no deduction is allowed.
For those who drive long haul scheduled runs of longer than ten hours, or have runs of ten hours or less which are not scheduled during ordinary working hours, a meal may be claimed after four hours have elapsed, and every four hours thereafter, up to a maximum of three meals per day.
You must regularly travel away from our area. For example, if you deliver milk for your dairy within your city, you do not qualify, but if you deliver milk around the region for a bulk carrier, you probably do.
However we have had some worrisome decisions from the people in the post-assessing units at CRA in this area lately that are going to force us to file formal notice of objections on behalf of clients. The claims of some transportation employees have been dismissed because the reviewer has not accepted that the employer is not truly a transportation company while others have been disallowed because the drivers have not been away overnight. While this is normally a requirement, exceptions are available. In the specific instance that I’m thinking of, we have a case of a driver who leaves Saint John, delivers a load to Fredericton where he picks up a new load, takes it to Moncton and picks up a final load to return to Saint John. The reviewer has determined that this driver operates locally and is not allowed to make a claim for meals under the TL2 provisions. Should be interesting to see what happens!
Roger Haineault is with Help 4 Taxes. He can be reached with specific questions or suggestions by calling 506-693-1212 or by e-mailing him at roger@help4taxes.ca. His column appears Mondays. |
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