A Value-Sized Meal Deal

Our Dispatches section kicks off with a thought-provoking story instigated by Jim Park, my colleague on highwaySTAR, our sister magazine for over-the-road drivers. It’s about an owner-operator in Winnipeg named Don Wilkinson who challenged the Canada Customs and Revenue Agency’s $33-a-day simplified meal expense claim for transport workers. He felt $40 was more reasonable; a judge-who happens to be the second-highest ranking tax court official in Canada-agreed.

I called a friend of mine who works for a big accounting firm and asked him how the CCRA would react to the judge’s decision. “Whatever they do, they’ll be really sneaky about it,” he said. “You know, CCRA auditors get $48 a day for meals when they have to travel. How would it look if an army of civil servants claiming $48 a day decided to shake down a bunch of poor truckers in order to hold them to $33?”

My friend laughed; I just kind of sighed.

You know, in this case there’s an important difference between most truck drivers and the average CCRA auditor. At some point the auditor’s employer-our federal government-decided that $48 a day was a reasonable allowance for meals its workers consume while on the road. The auditors don’t report the meal allowances as income, and they’re not allowed to claim a meal-expenses deduction on their tax return. Like most people, they turn in a meal claim at the end of each month, and their employer pays it.

What if trucking companies treated their drivers the same way? Instead of doling out 33 cents a mile, why not adjust your drivers’ pay down to, oh, 27 cents and cut them another cheque for the difference without any deductions at all? You say to your driver, clearly and definitively, “Here’s your pay, and here’s your per diem,” based on a reasonable and well-documented formula (concocted with the help of a tax specialist) that you keep in your files in case of an audit.

Think about it. Your drivers’ taxable personal income would drop, and as an employer, you’d cut certain elements of your tax liability related to payroll.

I asked Chris Bennett of TFS Group, a Waterloo, Ont.-based accounting firm for owner-operators and small fleets, for his take on the Wilkinson case and this per diem idea. The guys who could benefit most, he says, are incorporated owner-operators.

“You could create an employment contract between yourself and your company where you draw a reasonable per diem as part of your overall compensation,” Bennett explains. “The 50% rule would apply to the expenses your corporation then has in terms of write-down, but the combination of personal income tax savings, corporate income tax savings, and a pretty big reduction in Canada Pension Plan-because we’re lowering your T4 based on what you’re drawing-could be substantial. Like, thousands of dollars.”

In other industries, business expenses incurred while on the job are not expected to be paid with taxable personal income. Maybe it’s just convention, or maybe we just forget, but truck drivers are just businesspeople who travel. Why not apply the same rules of compensation that any other industry does?

***** MVTA Revisited … Again

Transport Canada has introduced-for the third time, if I recall correctly-amendments to the Motor Vehicle Transport Act of 1987 that would create federal standards for provincial motor carrier safety rating programs.

The rules would require each province to develop and maintain a carrier profile system based on National Safety Code Standard 14, something jurisdictions have been working on for the better part of seven years. The idea is to be able to produce comparable ratings for comparable performance all across Canada-a bad apple in one province would grade out as a bad apple anywhere.

There’s a lot riding on this, not the least of which is the reputation of any motor carrier subject to a rating. Furthermore, if a province fails to produce a rating system that works, Ottawa could nullify its ability to issue motor carrier safety certificates for extra-provincial travel. Without a safety certificate, you could be restricted from operating outside your home province. Yikes.

Some jurisdictions, notably Ontario and Quebec, already have a carrier profile system. Most do not. (For a sobering province-by-province progress report, read Fred Nix’s submission on Standard 14 to Transport Canada on behalf of the Canadian Council of Motor Transport Administrators-613/736-1003; www.ccmta.ca/crahome.htm).

Is all of this worth the hassle? If you’ve been rated, are you a safer carrier because of it? I’d like to hear what you think.