Truckers

I recently attended an www.ipbc.ca online workshop on tax for truckers. The presenter, Robert Scheper, THR Consulting Group Ltd., explained the disparity in expense claims between self-employed truckers, and truckers who work as employees, whether for their own company or someone else. It was very interesting.  He's written a book "Making your Miles Count: taxes, taxes, taxes.

There is another challenge Robert did not mention in the workshop, and it's one that's become interesting for contractors in the IT industry who contract themselves out under their own corporation, much like truckers do as owner/operators.  They may not meet the criteria to claim the small business deduction, and they may not be able to claim other business expenses, because they are considered a personal services business if they don't have at least five full time employees, plus other criteria, which you'll find in my Personal Services Business webpage.

I found an hour tonight to research and create a list of links from the CRA website to explain the differences.  Basically, an employee is able to claim a flat rate reimbursement for certain expenses, whether or not they spent the money.  As an incorporated employee, you would deduct those expenses prior to issuing a T4 for net earnings. How much less you'd pay tax on, would depend on how frugal you are.If you live on peanut butter and jelly sandwiches, it sounds like there could be a distinct advantage to incorporating. I'm not recommending anything here, just saying do the math, and be wary of other rules, like the Personal Services Business rules. 

If your corporation is just a wall between you and the company you work for, the personal services business rules may apply. If that's the case, your company can't deduct anything you wouldn't deduct if you were an employee who had a contract directly, and everything else the company paid for would end up on your T4 as a benefit, plus anything you left in the company as retained earnings would end up being taxed at the highest corporate tax rate. On the Canadian Tax Foundation LinkedIn Group we've been having a discussion about PSB's and their impact.  You won't find anything on the CRA website unless you know what to look under, as PSB's don't get a direct mention.  I've put a link to my other webpage on that topic on this trucking page.

Other considerations: WCB may deem that it is the company that hires your company that has to pay the premiums for WCB. Plus, as a corporate employee, you don't qualify for EI, and the new self-employed EI rules allow for self-employed persons to pay in and claim EI benefits.

If you like to read about tax, or you're concerned you won't meet your non-verifiable hours of PD by the end of the year, you'll find lots more links pages like this one under my TaxLinks Portal subscription, which has an annual expiry date of September 30, and sells for $30 plus tax.   

Click here to buy a subscription now to start reading more about tax!