Meal tax confusion continues for trucking

TORONTO, (Feb. 25, 2004) — A two-year-old case regarding meal tax deductions for a group of transport workers has caused some confusion in the trucking industry as to whether or not truck drivers who don’t operate long-haul are allowed to claim meal expenses.

The Canadian Trucking Alliance has begun referring members to a case in the summer of 2002, in which four B.C. Ferry workers appealed in tax court instances where the Minister of National Revenue disallowed their claims for meal expenses. In that appeals case Judge Bowie sided with the Crown attorney’s argument that the appellants were not entitled to deductions because the duties of their employment did not require them to stay away from home overnight, and therefore couldn’t make disbursements for “meals and lodging.” According to the Act, the word “and” is conjunctive, thereby the appellants cannot claim one without the other, the judge reluctantly decided.

The lawyer for the appellants argued that such a ruling would mean work hardship in a case where a truck driver, for example, took trips of several days, but incurred no expense for lodging because he was able to sleep in the cab of a tractor. Judge Bowie countered by saying he could not speculate on a purely hypothetical case, adding his decision could only be based on the B.C. Ferries workers case before him. By refusing to compare the ferry workers with truck drivers utilizing sleepers, the judge indirectly hinted that his decision may have been different if the case involved the latter group instead.

“For the present case, the legislative intent is clear. The deduction for meals is not intended to be available to workers who return to their homes each night as a matter of course,” he said. “It is perhaps redundant to point out that if it were otherwise, these Appellants would be placed in a preferential position in relation to the many people who are employed in jobs where they do not leave the municipality in which they begin their work each day, but who for myriad reasons cannot return home.”

Contrary to other media reports that indicated otherwise, CCRA has issued a guideline that would allow truckers to claim meals, provided the employee stays away from home overnight, and demonstrates the use of a sleeper. The guideline — which was issued in an October 2003 information circular in response to Judge Bowie’s comments — goes on to suggest for a trip of 10 hours or less, drivers cannot claim meals, except for lunch.

While the notice CCRA issued for sleepers is a positive sign, Chris Bennett of TFS Group — a Waterloo, Ont.-based consulting firm which has spent several years fighting Revenue Canada on meal tax issues on behalf of truckers — warned drivers and carriers to be wary of how serious CCRA regards their own guideline in each individual case.

‘The ‘conjunctive and’ is still out there, and hasn’t been challenged in any other case. The circular is what it is — it’s simply a guide, which can always be pulled depending (on the case),” says Bennett in an interview with Today’s Trucking. “I’ve seen it happen before. We had a situation on leases where they pulled it and didn’t tell anybody. Suddenly everyone that was capitalizing correctly, midway through the game were told they couldn’t do it anymore.

“To my mind it still hasn’t been dealt with (in Court). I would like to see the Tax Act change,” Bennett continues. “Right now the information circular is just an expression of thought that says, ‘this is how we feel right now.’ Well, that’s nice. But let’s imbed that in the Act so we can be sure.”

The guideline also doesn’t accommodate drivers away from home overnight, whose trucks aren’t equipped with sleepers. However, Bennett cites another case in Kitchener, Ont. three months after the B.C. Ferries appeal, which involved a husband and wife driver team who appealed CCRA’s meal tax rules. In that case, the same Judge Bowie ignored the “conjunctive and” clause that was so instrumental in the B.C. Ferries workers case. Put simply, because the Ministry’s council did not use the tactic, Judge Bowie did not invoke it in his decision siding with the drivers.

“That just shows how unimpressed he was with the tactic the first time,” says Bennett. “(CCRA) forgot to do their homework, so the judge basically said ‘too bad for you.'”

Moreover, Judge Bowie went the extra mile in defining just exactly what “lodging” means. In that second case, he ruled that “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 said. “Those include not only the use room 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.”

Bennett and TFS Group have been using the interpretation to qualify lodging for sleeperless truckers in court for over a year. In other words: Drivers might want to save their shower receipts at truck stops and hire a good accountant.