Page TRUCK NEWS June TAX TALK An accountant s guide

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					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%         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 or
When you buy diesel, various tax-       unanticipated costs. Faced with            In my opinion, it’s not income.      call 800-461-5970.