Another Helping

If you’re on the road, you know what it costs to eat three square meals a day. And it isn’t $11 a meal, the amount the Canada Customs and Revenue Agency allows transport workers under its simplified method for calculating meal expenses.

The simplified method means you don’t have to keep receipts for meals you pay for while you’re away from home. The $11 figure applies to transport workers specifically — truck drivers, flight attendants, railway workers, etc. The most you can deduct is 50 per cent of your claim, or $5.50 for each meal.

“Beside this being a ridiculously low amount, the fact that transport workers are singled out by the government in this way is, I feel, discriminatory,” says Tom Johnston. Johnston is a Summerland, B.C., attorney who is trying to organize a class-action suit against the federal government. He wants a court to order Ottawa to raise the meal allowance for transport workers to match what civil servants are allowed to claim. Most workers, for example, are allowed a per diem of $61.50 for meals and incidentals (paid in U.S. dollars for travel in the United States). The amounts are outlined in Appendix C, Meals and Allowances, from the Treasury Board of Canada.

“The government has, in the past, argued that truck drivers don’t deserve special tax treatment over other Canadians,” Johnston says. “It’s our opinion that CCRA’s tax policy already treats transport workers as a special case and is singling out truck drivers as a different class of Canadians. I think we have a constitutional case.”

It has yet to be declared a class action, but Johnston is gathering strength in numbers. He says more than 1,000 truck drivers have signed up to support the lawsuit and paid $100 each to cover legal costs, and he has 11 drivers lined up to launch test cases in each province plus the Yukon. Truckers have until the end of this month to sign up. You can contact Johnston at 250/494-0442 or go online to www.summerlandlawoffice.com for details.

Forgive me for going over old ground on the meal allowance issue, but I’ve gotten a lot of mail about it lately. I wanted to mention Johnston’s effort, even though I think you’d be better off keeping your hundred bucks in your wallet.

You don’t have to join a class-action suit and wait for an outcome that may never arrive to claim more than $11 a meal. That figure is not law; it appears only in the CCRA’s Employment and Expense Guide, which is distributed with income tax forms each year. Truck drivers using the simplified method have been claiming more in light of a case involving Don Wilkinson, the Winnipeg truck driver who used a daily meal rate of $40 on his TL-2, was audited, and won his appeal in a federal tax court (see our March 2001 issue).

The ones who have been successful talk about making a claim that’s fair. They provide reasons, in writing, for claiming more than $11 a meal. They refer to Wilkinson’s appeal, 1999-4687 (IT) I-Don J. Wilkinson v. Her Majesty the Queen. They include the Treasury Board appendix C to further back up their claim. That’s what Tom Balaz of Winnipeg did when he based his meal expense claim on $42 a day. When he got his 2001 refund, “CCRA did not change or re-assess to a lower amount as I figured they would,” he says. “Thus, no appeal from me is required.”

To avoid any argument about whether $11 a meal or the 50-per-cent deduction limit is fair, if you’re an owner-operator it’s far easier to incorporate. You can draw up an employment contract with your company that says when you travel on business you get a per diem. Pick a reasonable number: $33? $61.50? I remember looking at a Flying J menu last year and thinking $42 a day was fair. Doesn’t matter, really. You submit an expense claim, the corporation reimburses you, and at the end of the year the corporation writes the expense down by 50 per cent and pays tax on the non-deductible portion at an 18-per-cent rate. The combination of personal income tax savings, corporate income tax savings, and reduced Canada Pension Plan contributions — because of lower taxable earnings reflected on your T4 — could amount to thousands of dollars a year.

If you run a trucking operation, you could take a similar approach with your company drivers and pay them a per diem. Your drivers’ taxable personal income would drop, and as an employer, you’d cut your payroll-related tax liability.
A delicious solution for everybody.