Page 58 TRUCK NEWS June 2008 TAX TALK An accountant’s guide to cutting fuel costs Reporting it as such creates addi- tional, unwarranted expenses for the owner/operator. Slow down. Don’t over-rev the en- es are buried in the price. The US For example, the carrier may gine. Cut your idling time. There’s and Canada both levy a federal Tax charge its owner/operators for in- no shortage of advice from fleet fuel tax; in Canada, you pay GST Talk surance based on their gross in- managers, driver-trainers, or even or HST as well. come. your own gut about how to con- Then there are state and provin- Scott Factoring a surcharge into this trol the cost of fuel. cial taxes which vary from juris- Taylor figure would inflate the insurance But what does your accountant diction to jurisdiction. fee and unfairly reduce the fuel have to say? You don’t really know how surcharge’s affect of compensat- I don’t drive a truck for a living. much fuel costs unless you take all raising prices, cutting employees, ing for higher fuel costs. But I do see good ideas and deci- the taxes out. or simply eating the cost them- Fair or not, some carriers will do sions reflected in the balance If you’re an owner/operator selves, they choose the latter. whatever they want. sheets of owner/operators and leased to a carrier that’s responsi- Maybe that’s a reality of being It’s hard to pin them down to small fleet managers who are ble for fuel tax and reporting for self-employed. broker agreements that they finding ways to reduce the impact your vehicle, your only concern is Or perhaps, if you commit to themselves wrote and generally of volatile fuel prices on their finding the lower pump price. paying yourself $60,000 a year, are able to change at any time. business. But if the carrier charges you you draw that $5,000 a month no When it comes to comparing Talk to your accountant about when you owe fuel taxes or pays matter what. carriers to work with, you can’t fuel-saving strategies off the road. you when you’re due a refund, you In addition to paying household only look at one number but Here are four questions to ask: may be able to reduce costs by pur- expenses, you continue investing a must consider the whole pay chasing fuel in jurisdictions with the portion of that income so each package. What percentage of my best net price (we post an up-to- contribution compounds and If your carrier isn’t treating you operating cost is diesel fuel? date fuel-price comparison chart at strengthens your personal savings. fairly with fuel surcharges, per- Fuel traditionally represents 15% www.tfsgroup.com/tfs/wheretobuy- And you find other ways to save haps it’s time for a change. to 30% of a carrier’s operating fuel.html). on the business. There is no point in staying loy- cost. A recent report from the al to someone that’s not loyal to Is my draw a fixed cost What does my contract say Ontario Trucking Association says you. or a variable one? about fuel surcharges? that figure is closer to 45% today. Don’t believe the old trucker’s At many carriers in Canada and With fuel through the roof, insur- Among owner/operators and the tale that all carriers are the same. the US, the cost of fuel outstrips ance premiums continuing to in- carriers they’re leased to, the de- But don’t get fooled by one part the cost of labour. crease, and normal inflation, one bate over fuel surcharges has of a pay package, either. Because fuel is rising at a of the few expenses that is proba- moved beyond how they are cal- Review all the charges and greater rate than other operating bly not heading upward is your culated to how they are treated on paid-for items to determine how expenses (the price of diesel has salary. broker settlement statements. much you’d make at another car- jumped 250% over the last five If you’re an incorporated own- Some carriers show fuel sur- rier versus where you are now. years), it makes sense to monitor er/operator, your labour costs are charges on their broker state- Your accountant should be able to fuel as a percentage of your over- the total of the T4 wage expense ments with the revenue, others help you with this. I all operating cost. If you receive a and dividends you pay to yourself. show it as a reimbursement. fuel surcharge, or are setting rates, If you’re a sole proprietor, your A surcharge is an additional, – Scott Taylor is vice-president of it gives you a more precise idea of labour cost is your net profit – the variable cost that’s added to the TFS Group, a Waterloo, Ont., com- whether what you’re charging is number at the bottom of your basic rate for the service. pany that provides accounting, fuel enough to recoup your cost. P&L that you just paid tax on. It’s separate from the rate, fluc- tax reporting, and other business I know a lot of business owners tuates with the price of fuel, and services for truck fleets and own- Should taxes affect where wrestle with whether to take in theory will go away once fuel er/operators. For more informa- I buy my fuel? home less in order to pay for prices decline. tion, visit www.tfsgroup.com or When you buy diesel, various tax- unanticipated costs. Faced with In my opinion, it’s not income. call 800-461-5970.