I Googled myself and this came up.

http://thrconsulting.blogspot.ca/2009/01/origins-of-truckers-subsistence.html

[h=2]About Me[/h] THR Consulting View my complete profile


[h=2]Thursday, January 8, 2009[/h] [h=3]Origins of Truckers Subsistence Allowance[/h]

I have conducted hundreds of interviews and dozens of seminars. Many times in the process I have been confronted with the concept of “origins of subsistence allowance”. Many people ask a very good question “If it is such a great opportunity how come so few truckers are doing it?”.
First of all I’d like to say that CRA does not publish “tax tips” big or small. They generally only release information that reflects their internal policies, such as compliance, restrictions and general assistance on preparation (some exceptions apply).

The accounting industry then, is responsible for providing individual tax service for citizens. Companies like H&R Block, Liberty tax as well as a host of other franchises compete with T1 preparers coast to coast, most claiming the best value.

For the more complex returns, accounting firms also should be providing services on navigating the many options and opportunities. Professional preparers are responsible for finding and presenting the best tax opportunities available. With respect, the Tsunami like changes in the accounting industry has left professionals swamped with new regulations, restrictions and obstructions to service. An industry that “doesn’t like change” is overwhelmed with turmoil and backlog. However, that’s their excuse today but it provides no defense prior to approximately 2000-2002. Simply put, accountants (myself included) up until several years ago simply never thought outside the box.

The second thing I’d like to confirm is that I’m not working as a historian. Even in my book I resisted a detailed exposure of certain facts. So as to resist pointing the blame, I still prefer to restrict some information to the general public. I believe blame (sometimes) leads to retaliation and revenge. In history, revenge is the antithesis of justice and equality. In my opinion, it would be counter productive. However, the information I now share should not foster revenge but co-operation and collaboration.

Back in 1991 a trucking company was working for and with a pipeline company with varied contracts and results. They had a high GST return then low and visa versa. The fluctuation flagged an audit. The auditor (apparently a very helpful one) scoured through the books and found out why and was satisfied. The audit produced no re-assessments, all things were done well. The jolly (and apparently robust) auditor asked why the company wasn’t claiming the GST on the flat rate meal allowance and accommodation allowance provided the pipeline workers (ranging from $95 to $125 dollars per day). He conveniently calculated the amount to $143,000 (expensed at about $2 million). To state that the auditor was helpful is a six figure understatement.

One of the consultants who were working for the company at the time (Lucien Bleau) had a long chat with the auditor.

In the end, the auditor informed Mr. Bleau that there is nothing stopping the trucking industry from providing the allowance to drivers, and collecting back the ITC (GST Memoranda 400-3-11 and 400-3-3). The resultant opportunity was exposed.

According to my limited research and knowledge this is the roots of the opportunity. However, tracking the initial exposure to present is like finding the tail end to a bowl of spaghetti. There appears to be a lot of start and stops.

If I start to mention names and companies I run the risk of including or excluding a whole lot of people. Since I’m not interested in hurting anyone’s feelings I’ll keep it to one name… Lucien Bleau, the man many operators owe a cup of coffee or more. He was at the right place at the right time and asked the right questions.

The CRA agent (who will truly remain anonymous) is owed a multi-million dollar thank you.

Posted by THR Consulting at 10:29 AM





[h=4]1 comment:[/h]
Lucien B said... Well Thank You !!!

Lucien Bleau
November 22, 2013 at 8:17 PM

 

I recall the tax audit very well. The auditor was a great big fat guy. I had my secretary pick up a dozen donuts, a fresh pot of coffee. The audit went well and them he told me about the input tax credit and the rest is history.

 

And this too.

I wrote this article a couple years ago and it has been published in various magazines.

Truckspeaker is publishing it again in the January edition as it is close to tax time.

I will also post the link for the Revenue Canada website where you can verify the info.



June 2002--Employers pay less while Employees make more! --by Lucien Bleau


Lately we have all been reading about the Wilkinson tax Case and the lowly amount of $16.50 per day allowed for over the road expenses by Canada Customs & Revenue Agency. As the judge in the case said, the 50% of $33.00 per day is a guideline only, not law. And if one reads further into the guidelines, it states or a reasonable amount. The judge allowed the higher amount claimed by Wilkinson to stand.

Federal Civil Servants are allowed a tax free allowance (no receipts required) of $61.50 per day while away from their desks. A level playing field for all employees has been in place for many years. An employer can pay an employee a Subsistence Allowance that is tax free to the employee and expensed out by the employer who also gets a GST Input Tax Credit of 6 over 106. No receipts are required.

I first came upon this method when my past employer was being audited by the GST Department. The Auditor commented that I paid out a large amount of Subsistence and asked if I was aware that I could get an Input Tax Credit. He then printed out the memo referencing this Factor Method. It is a method that has been in use for many years.

Go to this Website and see it for yourself:


<A HREF="http://www.ccra.gc.ca" TARGET=_blank>www.ccra.gc.ca</A>


Click on TAX, click on BUSINESS, click on GST/HST, click on TECHNICAL INFORMATION, click on MEMORANDA, Click on 400-ITC, click on G400-3-11 Allowances & Reimbursements, click on .G400-3-11e.htm Start reading from Section 7. Subsistence is a fixed amount negotiated between the employer and employee and has been negotiated into many Union Collective Agreements for years. In the Pipe Line Construction industry, this amount is $108 per day. In some Teamsters Union Collective Agreements for highway drivers the rate ranges from $40 and up plus the reasonable cost of a hotel room. A

Approach your employer and negotiate with him to reduce your wages, mileage rate, commission, etc, and replace it with a fixed amount of Subsistence. You'll pay less taxes and take home a bigger pay check. Lease Operators and Owner Operators, get incorporated and negotiate your own Subsistence agreement. H

Here is a quick example of someone presently getting $48,000. per year. Let's reduce that to $38,400. plus Subsistence of $9,600. per year You are still getting a gross of $48K however you are taking home $2,439. more and your employer is getting an Input Tax Credit of $543. and lower CPP, EI and WCB contributions of $1,149. Ask him to contribute a portion of the savings into a Pension Plan for you. As a taxpayer, you're entitled to a level playing field. It's already in place, start using it.


Posted by permission of the Author: Lucien Bleau

[Pipeman]

[I Thought I had made a mistake until I realized it was just an error