If you’re an incorporated truck driver or owner-operator, no doubt you’re trying to comply with WSIB guidelines. Let’s briefly go over some tax guidance you ought to be mindful of to avoid the most prevalent WSIB compliance errors.
Due to the numerous federal and provincial rules that freight truck drivers must abide by, their accounting requirements are different from those of other businesses. For starters (and for tax purposes) they have to keep track of:
- Current fuel prices
- Wait times in between long-distance journeys
- Maintenance expenditures
A dentist wouldn’t know what that’s like. Moreover, trucking-related financial responsibilities are particularly time-sensitive and deadline-driven. How do you deal with that?
1. Incorporate Your Trucking Business
Coupled with your insurance company, you can provide another layer of protection to your personal assets — your home, car, and other possessions — by incorporating your truck driving business. This can further lessen your liability exposure in the event that you are held responsible for any claims involving damaged loads, accidents, truck equipment, or other issues.
After forming your trucking company, be sure to apply for a GST/HST number with the CRA.
2. Unique WSIB Regulations For Owner-Operators And Truck Drivers
You should be aware of the following WSIB regulations if:
- You’re an incorporated truck driver or owner-operator
- You subcontract work to another business
- You subcontract work to other incorporated truck drivers
The under-acknowledged fact is the Workplace Safety and Insurance Board does not automatically regard you as an independent contractor. According to the WSIB Act, there is an organizational test (akin to the CRA’s) that the WSIB uses to establish whether a person is an independent owner-operator or employee. The primary factors are as follows:
- Equipment/tool ownership (i.e., who covers truck expenses, etc.)
- Control factors (e.g., whether they can choose their vehicle, enter into other contracts, or maintain operational control)
- Factors of liability (e.g., who will be held responsible)
- Factors that influence profitability
- Is there an employer-employee structure (e.g.: are T4s or source deductions paid)
Obtain a WSIB account and enroll in coverage if you are thought of as an independent owner-operator truck driving business — otherwise, you are not immediately protected by WSIB insurance. If you are regarded as an employee (even if you may be incorporated), the business that hires you is typically liable for your WSIB coverage.
If you’re someone who hires an independent owner-operator or truck driver, you can get a clearance certificate to make sure they are in good standing with WSIB — so you can have confidence in who you hire, and minimize your risk. If not, and you hire someone who isn’t trustworthy, the consequences will land on your own lap if they mess up.
3. Apply The Meals Allowance To Minimize Your Taxes
As a long-haul trucker, think about establishing a corporate policy that provides employees with a daily food allowance (T4). While this non-taxable allowance is paid to individuals personally, it is also fully tax deductible for the trucking company. Double-check that you have the right paperwork and processes in place, including a logbook and forms for travel expenses, etc.
This underrated tactic can cut your personal and business taxes by thousands of dollars. Make sure the accountant you hire has experience working with incorporated truck drivers and owner-operators.
4. Use Your Corporation To Buy/Lease Equipment
You could lower your corporate taxes by fully deducting a truck’s purchase price as depreciation if you purchased or leased it as a corporation. This also enables you to use corporate funds to pay for all running expenses (such as insurance, repairs, and fuel) since the trucking equipment will be registered in the name of the corporation.
Not sure where to start? Contact us today for a free consultation of your trucking business.
Our accountants have financial experience in the truck-driving industry; we’ll listen to your unique circumstances, then work with you on a road map.
In the next part of this guide to accounting for a truck-driving business, we’ll discuss:
- Mileage allowances
- Work-from-home office expenses
- Cell phone bills
- Logbook documentation
- Makeshift receipts
