A Bit of Tax History and Future

A Bit of Tax History and Future

Thirty or forty years ago trucker drivers were much more isolated than they are today. Imagine driving without: a satellite radio, Cell phones, text messages or even CB’s. Coffee and truck stops used to be the only means of getting to know people and issues in the industry. The deep human need for interaction has been, at least somewhat, relieved by technologically. However, forty years ago there was a whole lot more trust and reliance on each other. In fact sometimes it wasn’t just a matter of interesting industry information but actual survival.

Today, in our deregulated highly competitive industry, timely and beneficial information is more than just interesting, it can be the difference between financial life or death. There is a near desperate need to clarify major issues and confront the disinformation running many operators amuck.

In association with Over The Road Magazine, THR Consulting Group has launched a Blog called CANADA TRUCK OPERATORS November 1, 2008. Included in the first discussion is a detailed comparison of After Tax meal allowance “Travel Directive Appendix C” (as provided by the Treasury Board of Canada Secretariat) and Lease/Owner Operators after tax benefit as calculated by the personal income tax returns.

The chart shows the year to year difference between the two income tax systems available to operators. I projected the effect March 19, 2007’s budget allowance (50-80%) had on after tax benefit all the way to 2011 (including an average historical increase in subsistence allowance).

In 2011 civil servants (and other industries) will be receiving approximately $88.27 (per day after tax) while our “lunch bag let down” will have propelled the trucker to $13.60 (after tax). Not to be unthankful but the difference will still be a staggering 649% (in 2011). Here is the year to year percentage difference:

2006 926% (as stated in my book, Making Your Miles Count)

2007 823%

2008 755%

2009 720%

2010 689%

2011 649%

My research data goes back all the way to 1984 but I only started the chart at 1992 because the years prior generally follow the same lines to 1992. In the chart there are three years worthy of discussion 1994, 2000 and 2002. The last two years show dramatic jumps in civil servants subsistence allowance of 10% and 12% respectively. If you want to know what happened during that time frame I provide a not so federal government friendly explanation in my book.

The most interesting year however, is 1992. On the chart it is hardly even noticeable as the after tax effect of truck drivers actually DROPPED from $5.87 to $5.38. This was the result of the Federal Budget where the Prime Minister at the time stated “…there are some industries that are not paying their fair share of taxes…”. Apparently he was oblivious to the already existing 794% difference between HIS after tax meal allowance and the industry “…not paying their fair share…”. So his budget boosted the aberration to 875%.

In the words of the judge providing over Don Wilkenson’s court case in August 2000 “…these kinds of aberrations cannot occur..”, and yet they did… and still do… unless of course you report your income to Canada Revenue Agency in a way that utilizes the non-taxable benefits of subsistence allowance (as explained in my book). If you use the appropriate system the average operator can save between $6-8000 per year in taxes. In today’s economy that amount can easily be the difference between collapse and survival.

Robert Scheper

Robert D Scheper has a Masters Degree in Business Administration and is the author of two books, “Making Your Miles Count: Taxes, Taxes, Taxes” and "Making Your Miles Count: Choosing a Trucking Company".

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