CTA and State of N.J. reach business tax agreement

OTTAWA, (Oct. 7, 2003) — The Canadian Trucking Alliance says a new agreement it signed with the New Jersey will significantly mitigate the impact of back taxes on Canadian carriers and simplify the compliance process for past tax years.

The agreement, signed in conjunction with the Government of Canada and the Province of Ontario, deals with the application of the New Jersey Corporate Business Tax (CBT) upon Canadian based trucking companies. Because New Jersey does not have a specific threshold for determining when a carrier becomes liable for the CBT, any common carrier making pick-ups or deliveries would create nexus with the State of New Jersey. This means that if a Canadian trucking company has made one pick-up or delivery in the State of New Jersey since 1993, this company is liable for CBT payments back to 1993 — plus interest and penalties, the CTA says.

Under the agreement reached with CTA, the State of New Jersey will only require payment of the CBT for the current tax year (2002) plus the prior three years (1999-2001). A statutory 5 per cent penalty and interest charge will also apply. New Jersey will not require carriers who qualify for the minimum tax payment (presently US$500) to file a CBT return for previous tax years (1999-01) — only for current (2002) and future years.

The CTA says a Canadian making one pickup or delivery in the State since 1993, as a minimum CBT tax filer, would owe the State in excess of US$9,000. Under the CTA agreement, this same company could cut their tax liability, including interest and penalties, to approximately US$2600. Carriers, who owe more than the minimum tax, will be able to receive a foreign tax credit from the Government of Canada.

The agreement is only available to Canadian carriers who have not been previously assessed by New Jersey. However, the State of New Jersey has assured CTA that it will consider potential remedies for Canadian carriers that have been previously assessed on an individual basis.

“Its time all U.S. States considered doing the same,” said CTA CEO David Bradley in a press release. “However, as a short-term solution the mitigates the impact of these types of taxes on Canadian trucking.”

The agreement between CTA and the State of New Jersey will expire December 31st 2003. In the New Year CTA will send the State of New Jersey a list of Canadian carriers that wish to participate in this agreement. Jan 1. will also mark the reintroduction of the State of New Jersey’s truck seizure program for Canadian carriers failing to comply with the CBT.