Check, please

A two-year-old decision in a federal tax court is causing some confusion as to whether truck drivers who don’t operate long-haul are allowed to claim meal expenses.

The Canadian Trucking Alliance is referring members to a ruling from the summer of 2002 in which four B.C. Ferries workers appealed the Canada Customs and Revenue Agency’s rejection of tax deductions for meal they ate while at work on the boat. The Crown attorney argued that the workers were not entitled to deductions because they couldn’t make disbursements for “meals and lodging,” a phrase straight out of the Income Tax Act. Literally, the word “and” is conjunctive: the ferry workers couldn’t claim one without the other. Judge Eric Bowie of the Tax Court of Canada reluctantly agreed.

The lawyer for the ferry workers argued that such a ruling would be a hardship in the case of a truck driver, for example, who took trips of several days but incurred no expense for lodging because he slept in his vehicle. Judge Bowie countered by saying he could not speculate on a purely hypothetical case.

By refusing to rule on truckers and their sleepers, Judge Bowie left the door open for a different interpretation in any future case. Anticipating this, the Canada Customs and Revenue Agency (CCRA) issued a guideline that apparently allows truckers to claim meals, provided the employee stays away from home overnight and demonstrates use of a sleeper. The corollary then is that truckers who don’t use their bunk can’t claim meals. But that’s not necessarily true.

Meal claims can depend on a variety of circumstances–everything from how far you travel to how many hours you’re on the job. What’s important to remember is that unless the Tax Act itself is revised, nothing that happens during these appeals is precedent setting. In fact, says Chris Bennett of TFS Group, the Waterloo, Ont., business consulting and accounting firm, the government could backtrack on its guideline at any time.

“The ‘conjunctive and’ is still out there and has not been challenged in any other case. It’s simply a guide, which can always be pulled depending (on the case),” says Bennett. “I’ve seen it happen before. Right now the information circular is just an expression of thought that says, ‘This is how CCRA feels right now.’ Well, that’s nice. But let’s imbed that in the Act so we can be sure.”

The flip side, of course, is that truckers may challenge CCRA on a case-by-case basis–and many truckers do. Three months after the B.C. Ferries case, a husband and wife team appealed CCRA’s meal tax rules in court. In that case, the same Judge Bowie ignored the “conjunctive and” clause because the Crown attorney chose not use it.

“That shows how unimpressed Judge Bowie was with the tactic the first time,” says Bennett. “The Crown forgot to do their homework, so the judge basically said, ‘Too bad for you.'”

Too bad for CCRA, because in that case Judge Bowie went the extra mile in defining just exactly what he considers “lodging.”

“The word ‘lodging’ must be taken to include within it all constituent elements of what is commonly included in the meaning of the word,” he wrote. “Those include not only the use of a room with a bed, but the bathing and toilet facilities that go with that room. The appellant when he was not staying in motel purchased the bathing and toilet component of lodging separately and is entitled to a deduction for it.”

In other words: drivers passing through truck stops might want to save their shower receipts and hire a good accountant.

To get clear a description of what type of drivers qualify for meal claims under various circumstances call TFS at: 519/886-8070.