Long-haul truck driving in Canada can be grueling, with drivers working 13 hours per day, and even longer if they work north of the 60th parallel.
While the average salary ranges from $55,000 to $65,000 per year, long-haul drivers are often paid bonuses, enabling them to earn significantly more. Unfortunately, this can also mean paying a lot more in taxes.
Fortunately, long-haul truck drivers in Canada can claim a number of tax deductions while on the road. This includes mileage, daily meal allowances, maintenance, and showers and lodging expenses.
The more you claim, the less you pay in taxes. That’s why it’s important to know what some of the tax perks are of being a long-haul truck driver and how to deduct them.
Defining Long-Haul Truck Drivers
Some expenses for long-haul truck drivers are deductible at a higher rate than the 50% normally permitted by the Canada Revenue Agency, so, it’s important to make sure the CRA considers you to be a long-haul driver. After all, making meal deductions and claiming lodging expenses when you aren’t a long-haul driver could mean ending up on the wrong side of Revenue Canada.
To be considered a long-haul truck driver in the eyes of the CRA, you need to be an employee whose main duty is to transport goods, passengers, or both, using a long-haul truck. A long-haul truck is a freight truck with a gross vehicle weight rating of more than 11,788 kilograms.
Meal and Lodging Expenses for Long-Haul Truck Drivers
Transportation employees are allowed to deduct 50% of their meal and beverage expenses. If you’re a long-haul trucker though, meal and beverage expenses during eligible travel periods are deductible at 80%.
The eligible travel period is defined as a period during which you are away from your municipality or metropolitan area for at least 24 hours for the purpose of driving a long-haul truck that transports goods at least 160 kilometers from the employer’s establishment, where you usually report for work.
For example, if you travel 160 kilometers round-trip and the trip lasts 14 hours, you cannot deduct meal expenses for this trip. That’s because you did not travel far enough, and you were not gone away for long enough.
If, however, you travelled at least 160 kilometers one way, and were away for more than 24 hours, you can claim your meal, lodging, and shower expenses.
Again, the deduction rate for long-haul truckers, 80%, is higher than what others in the transportation industry can claim.
Lodging and Showers
As a long-haul trucker, you can deduct lodging and shower expenses. If you’re tired of sleeping in your cab and want to spend the night in a hotel room, you can claim 80% of the cost and deduct it from your income. If a room costs $100, you can claim on your income tax ($100 X 0.80%=$80).
Truck stops offer free showers when you purchase fuel, but if you don’t purchase fuel, you need to pay. Keep the receipt and claim 80% of that expense come tax time.
There are two different ways to calculate meal expenses: the detailed or simplified method.
The detailed method is straight forward. Keep all of your meal receipts and your travel log, then add up the costs of your meals and multiply them by 80% to calculate your tax deductions.
The simplified method doesn’t entail keeping track of receipts. You just need to calculate the number of meals you purchase each day. Canadian long-haul truck drivers are allowed to claim up to $51 per day. That works out to three meals a day at $17.
You are allowed to claim one meal after every four hours after the departure time, to a maximum of three meals per day. Then, you multiply the number by 80%, meaning, your daily meal tax deduction comes in at $40.80.
The higher tax deduction rate for long-haul truck drivers can really add up. A long-haul driver’s annual meal expenses can be more than $16,000. At $16,000, you can deduct $12,800 from your annual income on your taxes.
Long-haul truck drivers can deduct other work-related expenses on their taxes.
The general rule for these tax deductions is that they must not have been already reimbursed by the company, you have the receipts, and you have valid log books.
The number of eligible expenses long-haul truckers can claim is quite extensive, and can include:
- Cleaning supplies
- In-cab living expenses
- Load securement
Like any small business owner, it’s imperative that you keep detailed lists of your trips and all receipts, just in case the CRA asks to see them.
If you can’t provide proof of your expenses, the CRA will deny your claims.
FBC, Helping Long-Haul Truckers Maximize Their Deductions
If you’re a long-haul trucker and need help determining what you can deduct come tax time, want to make sure you’re claiming everything you legally can, and or need help preparing and filing your taxes, contact the tax experts at FBC.
FBC has worked exclusively with independent contractors, small business owners, farm operators, and entrepreneurs since 1952. Over the last 66 years, FBC has helped tens of thousands of clients, from coast-to-coast, maximize their deductions and minimize their tax burden.
In addition to providing customized tax services, FBC offers bookkeeping, tax preparation, tax planning, succession planning, financial and estate planning, accounting, risk management, and financial reporting.
For more information on FBC and the services we offer, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.