Incorporated truck driver or owner operator who is incorporated? Then this blog post is for you to read, we will briefly be discussing some tax tips that you should be aware about along with one of the common pitfalls of the WSIB compliance.

By incorporating your truck driving business you create another barrier to protect your personal assets such as your house, vehicles etc. in conjunction with your insurance provider. This will reduce your liability exposure even further in case there should be any claim made against you for damaged loads, accidents or truck equipment etc. Make sure you also register for a GST/HST number with the CRA after incorporating your truck driving business. Visit https://www.birdi.ca/incorporating-company-ontario/ to learn more.

As an incorporated truck driver/owner operator who obtains subcontracted work from another company or subcontract the work yourself to other incorporated truck drivers, you should be mindful of the WSIB rules. You are not automatically considered to be an independent contractor by Workplace Safety and Insurance Board (WSIB) for their purposes. The WSIB has an organizational test (similar to the CRA’s) to determine if you are independent owner operator or worker (employee) as per the WSIB Act, the main criteria is as follows:

–      Ownership of equipment/tools (i.e. who pays for the truck expenses etc.)

• Control factors (i.e choice to select vehicle, enter other contracts, control of operations etc.)
• Liability factors (i.e. who is liable in the work conditions)
• Profitability factors
• Employer-employee relationship in fact (i.e. are T4s or source deductions paid etc)

If you are considered an independent owner operator truck driving business, you are not covered for WSIB insurance automatically, you should consider opening a WSIB account and take coverage. If you are considered a worker (though you may be incorporated), the company employing your services, is usually responsible for your coverage with WSIB.

You can obtain a clearance certificate as a principal who hires an independent owner operator truck driver to ensure they are in good standing with WSIB to limit your liability exposure, otherwise, the liability can come crawl back to you the principal for their mistakes. You can contact WSIB for guidance as well.

As a long-haul truck driver, you can consider creating a company policy for a daily meal allowance available to employees (T4), this allowance is a non-taxable benefit paid to you personally, but at the same time is fully tax deductible for the corporation. You need to make sure you have proper documentation and procedures in place such as a logbook, travel expense forms etc. This strategy is often overlooked but can save you thousands in both corporate and personal taxes. You need to ensure you are using an accountant who deals with incorporated truck driver/owner-operators.

As an incorporated truck driver/owner operator, by taking a salary you will be eligible for the Meals Allowance discussed above, and since you will be receiving a non-taxable meal allowance, your salary requirements will be reduced saving you in payroll taxes. If you still require additional funds, you can always opt for additional dividends during the tax year from your corporation.

By purchasing the truck under the corporation, you can fully deduct the purchase costs as depreciation which will reduce your corporate taxes. Since the trucking equipment will be under the corporate name, you will be eligible to pay all operating costs (i.e. insurance, repairs, fuel etc) directly from the corporation funds.

Track the KMs you travelled with your personal vehicle (not the truck equipment) and get reimbursed from the corporation tax-free, this is another non-taxable benefit you can receive and deduct as an expense for the corporation. As an incorporated truck driver/owner operator, you will often find yourself doing small trips with your personal vehicle to the truck parking lots, visiting banks, the accountant etc. these KMs are business related and can be claimed.

Most incorporated truck drivers/owner operators use a portion of their personal home to maintain records and conduct office duties for the business. You can deduct a portion of the household expenses and get reimbursed from the corporation tax-free.

You can deduct a portion of your cell-phone bill if it is used in the truck driving business, this is another tax-free benefit you can deduct in the corporation and receive tax-free personally. You can also consider registering a phone under the corporation, it can then be paid directly from the corporation.

In conclusion:

With the correct tax advice and advance planning, as an incorporated truck driver/owner operator, you can optimize your taxes and efficiently operate as an incorporated truck driver/owner operator. Speak with one of our tax accountants today to let us help you minimize your taxes.

Disclaimer: The information provided on this blog is intended to provide general information. You should consult with a tax professional to full determine the scope of your situation, Gurrai Birdi and Birdi Chartered Professional Accountant shall not be held liable from usage of the information provided on this page.