When you operate a transportation business, whether as an owner operator or with a fleet of drivers, the costs associated with driving truck can pile up quickly.
That's especially true in the long-haul trucking industry - the expenses related to meals, lodging and other related necessities can become daunting.
That's why it's so important to save everywhere you possibly can - and one of the best opportunities for saving comes when you pay your taxes at the end of the year. You may not know it, but you can deduct a large amount of these expenses from the costs you pay to the CRA, so make sure you and your drivers know what they can and can't deduct.
We've listed a few frequently asked questions regarding tax deductions for transportation businesses and employees below. Study them closely, and then research them further on your own, if possible - you may just find that they can help you make more money over the course of a year than ever before.
Q: Can truck drivers deduct the cost of meals?
A: Yes, you can deduct the cost of meals from tax payments. So long as the meal expense occurred during an eligible travel period, you can recoup a significant amount of the costs.
Q: What is an eligible travel period?
A: An eligible travel period is any time when the driver is away from their home municipality or metropolitan area for 24 hours or more, for the purposes of professional transportation. Drivers and businesses can deduct the cost of meals that occur under these guidelines.
Q: How much will these deductions cover?
A: That depends on your job! If you're a long haul trucker, then you'll be getting back the vast majority of what you spend on your meal and beverage expenses. Long-haul truckers were approved to recoup 80% of the cost of meals and beverages during 2013, according to the CRA.
For other professionals, the deductions are slightly smaller, but still very significant. Other transportation employees are able to recoup 50% of their meal and beverage expenses by way of a deduction.
Q: And what about lodging?
A: Indeed - transportation truck drivers can deduct the costs of lodging as well, using Form TL2.
Q: What are the standards governing those deductions?
A: There are, of course, some rules for deducting lodging costs. In order to do so, drivers need to meet the following requirements:
• You must work for an airline, railway, bus or trucking company, or any other business whose main operation involves transporting goods or passengers.
• The travel must be in a vehicle whose main purpose is work, not personal use (the vehicle is used 90% or more for business use)
• You regularly travel away from your own home base.
• You regularly incur meals and lodging expenses as part of your work.
Of course, all the work that goes into obtaining these deductions - collecting and filing receipts, making sure you only spend during eligible travel periods, and more - can account for a significant amount of work.
That's why so many transportation businesses turn to accounting and tax services firms for support - the money and time spent to get these deductions are well worth the savings.