Last updated: Nov. 29, 2024 

Year-End Transportation Tax Tips for Canadian Truckers 

Long hours, harsh conditions, and a constant battle against the clock. As a truck driver, you’ve got a lot on your plate. But what about your taxes? Are you missing out on valuable tax deductions and credits for your transportation business?  

Whether you’re an employee, self-employed with your rig or have incorporated your business, there are year-end strategies that can help you keep your hard-earned money from slipping away at tax time. 

1. Income Splitting  

The tax on split income (TOSI) rules or income splitting rules have tightened, but depending on your tax situation, some income redistribution strategies may still help you.  

For example, you could lend investment money to your spouse at the prescribed interest rate set by the CRA (currently 5%). While the higher-income earner declares the interest paid, their overall income increases minimally. The lower-income spouse invests the funds, earning a higher return than 5%. This strategy can reduce the family’s overall tax burden and build wealth. 

Consult a tax expert to determine if this strategy is right for you and your family. 

2. Review Compensation Options Against CPP Enhancement 

If you’re incorporated, how you pay yourself from your corporation will have an even more significant impact now that the CPP enhancement has ramped up. As such, this is the perfect time to review what kind of compensation will best meet your tax and financial goals. 

While dividends may seem like a good idea from a tax savings point of view, they don’t contribute to your Registered Retirement Savings Plan (RRSP) contribution limit or the Canada Pension Plan (CPP). Plus, they won’t protect you if you get hurt or injured. But again, the CPP enhancement means less take-home pay, which could negatively affect your immediate cash flow. Seek tax advice to understand what works best for you. 

3. Organize Paperwork and Maximize Tax Deductions  

Whatever your employment situation, getting your paperwork in order now can help you take advantage of crucial transportation deductions and make informed purchasing decisions before the end of the calendar year. 

Self-Employed Truckers Mileage for Business Use of Personal Vehicle 

If you’re self-employed and use your own vehicle to earn business income as a trucker, the CRA considers this to be business use of a motor vehicle. This means you can write off many expenses for running your rig as long as you keep a mileage log.  

RELATED How to Keep Audit-Proof Mileage Logs that Lower Your Taxes 

Long-Haul Truckers and Other Transportation Employees 

As a long-haul truck driver employee, you can deduct 80% of your meal and beverage expenses during eligible travel periods. Other transportation employees can deduct 50% of their meals, lodging, and other expenses using the simplified, detailed, or, in some cases, the batching method.  

Incorporated Truck Drivers and Transportation Businesses 

If you’re an incorporated truck driver, understanding how to deduct vehicle expenses can be complex. While you can generally deduct reasonable vehicle costs, it’s essential to consider how you use the vehicle. If you, as a shareholder, use the vehicle for personal purposes, you may owe taxes on the benefit. Similarly, if you provide a vehicle or allowance to employees for personal use, they may have a taxable benefit.  

To ensure you’re taking advantage of all available deductions and minimizing your tax liability, it’s best to consult with a tax specialist. 

4. Capital Cost Allowance 

If you’re considering a large capital purchase, like a vehicle or other equipment, you may be eligible to claim Capital Cost Allowance (CCA) deductions. CCA allows you to spread the cost of significant expenditures over multiple years for long-lasting assets. For example, freight trucks rated above 11,778 kg are Class 16, which allows for 40% CCA – pretty significant dollars when considering a rig’s cost these days. 

You also have a lot of flexibility with CCA and can claim the amount you’d like, from zero to the maximum allowed for the year. The key is to act before the end of the calendar year so you can time your expenses and CCA deductions to your advantage. 

5. Tax Incentives For Asset Purchases 

As of 2024, two tax incentive programs remain when purchasing assets for your business: the Accelerated Investment Incentive (AII) and the Immediate Expensing Property rules. 

While the AII is in its winddown phase (2024-2027), it can still allow you to deduct more of your CCA in the first year you purchase a capital item. Immediate expensing rules will enable you to deduct the total cost of qualifying assets in the year they are acquired rather than depreciating them over time, and they are still available to individuals. Again, your eligibility depends on your circumstances, so speaking to a tax expert is best. 

Tax Planning Lets You Keep More of Your Money 

A well-planned tax strategy is as essential to reaching your destination as GPS. 

Planning ahead – especially for big-ticket items like vehicles and equipment – allows you to take advantage of specific tax rules and incentives. 

Download our year-end tax planning guide for even more tips on creating a tax strategy that maximizes benefits for truck drivers. 

Want to learn more about creating a tax strategy that’s tailored to the needs of truck drivers and other transportation employees? Click the link below to connect with the FBC team. We would be happy to help!