Accounting for Truckers & Owner-Operators

Truck drivers come in three tax shapes, and the return is different for each

A company driver on a T4 files a personal return and, if the employer certifies the conditions, claims meals and lodging as an employment expense. An owner-operator who has not incorporated reports the business on the personal return, with the truck, the fuel and the meals against it. An incorporated owner-operator files a T2 for the corporation and a T1 for themselves, and the question of how to take the money out — salary, dividends, or a mix — is decided every year. Most of the questions we get from truck drivers are really questions about which of the three they are, or should be.

Owner-operators are usually paid by settlement statement, with fuel advances, insurance, plate costs, escrow and chargebacks all netted against gross revenue. The books have to be built from the gross, not the net, or the GST and the expense claims are both wrong. Why trucking accounting is its own discipline sets out the rest of what is different.

Tax preparation for truck drivers: what the return actually needs

The trip log. Every meal claim, every away-from-home night and every cross-border day rests on it, and it is the first thing a CRA review asks for. Long-haul drivers can claim meals under the simplified method: a flat per-meal amount to a daily maximum, deductible at 80% during an eligible travel period rather than the usual 50%. The rate is set by CRA for each tax year. The long-haul meal claim, with the current figures carries the rate and the eligibility rules.

After the log: fuel receipts by jurisdiction, repairs and tires, insurance, plates and permits, the financing statement on the tractor, cell phone and satellite, and the settlement statements themselves. A year that arrives as a shoebox is preparable; a year that arrives without the log is not, at least not at the amounts the driver is entitled to.

Cross-border hauls change the GST picture entirely

Freight transportation that crosses the border is generally zero-rated for GST/HST: no tax charged on the revenue, but the input tax credits on fuel, repairs and equipment are still recoverable. A cross-border operation therefore tends to file in a refund position, while a purely domestic one remits. That difference decides how often it is worth filing and how much cash is sitting with CRA between returns. GST/HST filing covers the return itself, and the filing deadlines page covers when each reporting period is due.

Leased to one carrier: the classification question

An incorporated owner-operator leased exclusively to a single carrier, driving that carrier’s dispatched loads under its authority, is the fact pattern CRA looks at when it considers whether a corporation is a personal services business. The consequence of that finding is a corporation that loses the small business deduction and most of its deductions. That is why the lease agreement, the ownership of the tractor and who bears the risk of a bad month all matter more than they appear to. Personal services business risk explains the test, and it is a conversation to have before incorporating rather than after.

Trucking companies with drivers: employee or subcontractor

Once there is a second driver, the company is either running payroll or paying a contractor, and CRA decides which by looking at the whole relationship. Who controls the work? Who owns the truck? Does the driver have a genuine chance of profit or risk of loss? How integrated are they into the operation? Get it wrong and the payer faces retroactive CPP and EI assessments plus penalties. Employee or contractor, as CRA decides it sets out the factors, and payroll covers the running of it once the answer is employee.

We work with truck drivers and trucking companies, online, wherever the trucks are based — trucking accountant in Abbotsford and the Fraser Valley among them. The fee is fixed and agreed in writing after we review your enquiry; published fees show where it starts.