Well, we have one more day left this year. My kids (early teens) are starting on the transition phrases such as “…see you next year” or “…I’ll wait till next year to do that!”. All the phrases we learnt to say decades ago when we experienced a new year. The humor wears off after a few decades, yet we chuckle along for posterity.
I’ve taken on a daunting task these last couple years. Promoting incorporation and subsistence allowance in an industry that is 80-90% self-employed is a monster job. In the words of Yancy from The Waltons “…I thought this would be a much bigger task than I thought it would be!”
I estimated five to eight years for saturation to take place in the industry… in some respects I guess I was right. However, the industry seems to have sat up and taken notice in respectable size pockets across Canada. When I started this blog (November 1st), I settled on not “evaluating” success for two years. However, today the consistent volume of hits (as well as other writers commenting in their articles) has convinced me that many are listening, and not just through publicity but firms and individual operators as well.
There is only one problem with a mass movement, it is disorganization. I am still concerned with the implementation of the employer-employee agreement. Talking to as many accountants and operators as I have these last couple years I have concluded that there are a whole host of operators (and accountants) not fully complying with employee agreements. Their “audit trail” looks virtually identical to self-employed status. This will NOT satisfy the CRA, at least not without a needless fight. Both accountants and operators must follow the rules of the agreement and integrate their monthly records with CRA’s system. There must be a regular salary, regular source deduction remittance, accurate subsistence allowance checks etc. If the operator hasn’t changed their cash flow habits, chances are it’s not done right.
As the industry ramps up usage of the system CRA WILL retaliate! It’s hard to ignore $100-200 million dollars in revenue. They may not retaliate publicly but probably through individual disqualification and intimidation. Without a universal standard, national support and networking, private accounting firms are vulnerable to CRA bullying. If you’re an accountant you know what I mean, if you’re an operator who is choosing an accounting firm (and the one who will ultimately defend it) it is your primary concern. If you are required to sign a waver just remember, you are on your own, you are officially “SELF-ensured”. You may only have a year or three to prepare your personal system for defense. It truly is the time to think ahead.
About Me
Tuesday, December 30, 2008
Tuesday, December 23, 2008
"Simple" Cause and Effect
The trucking industry is changing in many ways. Driver demographics are only one. Over the last several years, many trucking companies in Canada fished for drivers in Europe with encouraging results. This trend even affected our accounting firm, so much so that I hired an account executive that was fluent in German and some Russian. For those clients of ours that immigrated from Britain… you are just going to have to be patient with me… I’m still researching. I’ve been married for over twenty years… anyone speak “Emotionese”?, of course I need a translator that is fluent in my native Simplelodeon” (dialect of Nickelodeon).
Changing the demographics of the trucking industry through immigration sounds and looks like a fast and easy fix, however, there are side effects that some companies seem to be refusing to acknowledge. For instance, plucking a driver and family from their “home” and relatives is not without drawbacks. Most eventually desire to return for visits. Usually immigrants return to visit family and friends once every year or two (at least the first number of years). However some companies refuse to let them go, producing some rather ticked off not so foreign… foreigners. It appears some companies forget that loyalty is built by the companies not the drivers.
This anomaly is not the only effect that Europeans have on the Canadian trucking culture. They bring in a comprehensive understanding of the European style of drivers pay and “DOT” compliance. If anyone has ever driven in Europe as a commercial truck driver the rules (compared to North America) are at the least… shall we say… intrusive. Therefore, it’s not the classical DOT issues that most immigrants comment on (at least generally).
However, driver pay appears to produces a burr in the saddle for some. Europe doesn’t have “open roads”, they can’t drive 100km an hour for eight hours (even if they wanted to). In Canada getting paid by the mile is their first little leap of faith. It sometimes takes a little mentoring to balance their financial expectations with driver fatigue. You see, European drivers are used to getting paid by the hour, not just the driver but the truck as well. The system evolved that way as HOS and other legislation squeezed and unions negotiated.
Comparatively, in North America, the HOS is starting to squeeze. However, that alone doesn’t create the aggravation. When Ontario and the Quebec rolled out the speed limiter legislation many Europeans had flashbacks of continental careers. The association was just too great to overlook. Questions such as “How much should an operator charge per hour for their truck?” started showing up interview after interview. We may have heard it more than most firms because we deal with subsistence allowance (per deum) but I believe the national seed has been planted.
Let me prognosticate (as does our ground hog Punsatoni Phil), “By the end of 2016, per deum will be available at most quality based trucking companies”. I know that may cause coronary heart failure at Trucking Associations but the collective squeezing of operators and drivers nationally causes many to start pointing fingers. Sooner or later the chronic driver shortage will advance to the next level, become creative and much more educated. If you so desire, you can go ahead and laugh at me… I’m only speaking Simplelodeon.
Changing the demographics of the trucking industry through immigration sounds and looks like a fast and easy fix, however, there are side effects that some companies seem to be refusing to acknowledge. For instance, plucking a driver and family from their “home” and relatives is not without drawbacks. Most eventually desire to return for visits. Usually immigrants return to visit family and friends once every year or two (at least the first number of years). However some companies refuse to let them go, producing some rather ticked off not so foreign… foreigners. It appears some companies forget that loyalty is built by the companies not the drivers.
This anomaly is not the only effect that Europeans have on the Canadian trucking culture. They bring in a comprehensive understanding of the European style of drivers pay and “DOT” compliance. If anyone has ever driven in Europe as a commercial truck driver the rules (compared to North America) are at the least… shall we say… intrusive. Therefore, it’s not the classical DOT issues that most immigrants comment on (at least generally).
However, driver pay appears to produces a burr in the saddle for some. Europe doesn’t have “open roads”, they can’t drive 100km an hour for eight hours (even if they wanted to). In Canada getting paid by the mile is their first little leap of faith. It sometimes takes a little mentoring to balance their financial expectations with driver fatigue. You see, European drivers are used to getting paid by the hour, not just the driver but the truck as well. The system evolved that way as HOS and other legislation squeezed and unions negotiated.
Comparatively, in North America, the HOS is starting to squeeze. However, that alone doesn’t create the aggravation. When Ontario and the Quebec rolled out the speed limiter legislation many Europeans had flashbacks of continental careers. The association was just too great to overlook. Questions such as “How much should an operator charge per hour for their truck?” started showing up interview after interview. We may have heard it more than most firms because we deal with subsistence allowance (per deum) but I believe the national seed has been planted.
Let me prognosticate (as does our ground hog Punsatoni Phil), “By the end of 2016, per deum will be available at most quality based trucking companies”. I know that may cause coronary heart failure at Trucking Associations but the collective squeezing of operators and drivers nationally causes many to start pointing fingers. Sooner or later the chronic driver shortage will advance to the next level, become creative and much more educated. If you so desire, you can go ahead and laugh at me… I’m only speaking Simplelodeon.
Thursday, December 18, 2008
My Contrarian DNA
Well the kids are getting out of school tomorrow. It gets one thinking about eggnog, a cracking fire place and family gatherings. Someone once told me that at a family gathering, their is always one “oddball” relative that makes the others roll their eyes and sigh. If your family gathering doesn't have one of those….then YOU’RE probably IT!
It also a time of reflection and contemplation. Since I’ve been in the industry for over 20 years (it doesn’t sound so long if you say it really fast), I’ve met a lot of really great people, and not just a LTL of oddballs. I am convinced the trucking industry has a significantly higher percentage of highly motivated and passionate people at its helm and on its deck. Working with hyper achievers should come complete with a case of valium (or eggnog).
In my line of work I also rub shoulders with several related industries (for example CRA). Recently several individuals and organizations have contacted me, encouraging further anti-government sentiment. So, being faithful to my contrarian DNA... I must respond!
I want to express my sincere appreciation to some really fantastic people who work as auditors at Canada Revenue Agency. Sometimes the roses are overshadowed by the thorns. In my experience there are many more roses then thorns. I have personally seen the anguish on the faces of auditors torn between doing what was right and doing what they are told to do. No matter which choice they have gone (and I've dealt with both directions) I think I still retained at least some form of respect for them, I wish them a very Merry Christmas
It also a time of reflection and contemplation. Since I’ve been in the industry for over 20 years (it doesn’t sound so long if you say it really fast), I’ve met a lot of really great people, and not just a LTL of oddballs. I am convinced the trucking industry has a significantly higher percentage of highly motivated and passionate people at its helm and on its deck. Working with hyper achievers should come complete with a case of valium (or eggnog).
In my line of work I also rub shoulders with several related industries (for example CRA). Recently several individuals and organizations have contacted me, encouraging further anti-government sentiment. So, being faithful to my contrarian DNA... I must respond!
I want to express my sincere appreciation to some really fantastic people who work as auditors at Canada Revenue Agency. Sometimes the roses are overshadowed by the thorns. In my experience there are many more roses then thorns. I have personally seen the anguish on the faces of auditors torn between doing what was right and doing what they are told to do. No matter which choice they have gone (and I've dealt with both directions) I think I still retained at least some form of respect for them, I wish them a very Merry Christmas
Tuesday, December 16, 2008
Specking Your Taxes (condensed from OTR Article)
Reducing your costs during a time of slim margins is the first smart thing operators do. Especially today, drivers who spec their trucks for 75 MPH just don’t reflect smart business sense (regardless of speed limiter legislation). When oil was $10-15 per barrel nobody cared, but today it’s nearly certain financial suicide. A lease/owner operator must think business minded now more than ever before. Bells and whistles can sometimes become death and destruction.
Smart operators are still making money. They’re still doing ok because they thought ahead to most all the risks and pitfalls then devised a plan to minimize or even eliminate them.
Thinking ahead for your taxes is also a smart business choice. Too many drivers still have “off the lot” mentality when it comes to taxes. They think that, at the end of the year, taxes are what they are. When they drop off their shoebox full of statements and receipts they think there is no other result than the tax bill presented. This is how they’ve always done it. I hate to break it to them harshly but that’s just not true. It is no truer than specking a truck for 75 MPH and saying fuel consumption “…is what it is”.
The Canadian Tax system is complex. It is sometimes written in vague terms that are subject to considerable interpretation. It is what keeps the accounting industry hustling. The Income Tax Act says a business can deduct “a reasonable amount” of meal expenses. The Tax Law does not mention ANY number. It is the mandate of Canada Revenue Agency to determine what that amount is. Once CRA determines that maximum number for the year (or time period) it is assumed by the citizens and the tax courts to be fare, just and universal. However, this is where confusion and controversy arises.
CRA allows several different systems of reporting business income. Each system has subsequent rules assigned and the bottom line results can vary significantly. The difference is how expenses are reported and presented to CRA.
Let me give you what I consider an extreme example of difference in reporting and presenting. Singleton vs. Canada 2001 2 S.C.R. 1046, 2001 SCC 61. A lawyer took $300,000 capital out of his partnership and bought a house, then (the same day) he took out a mortgage for $300,000 and BORROWED that money to his law practice. He reported the interest on his personal home mortgage as “tax deductible”. CRA audited his return and rejected the interest. The first time I heard of the case I didn’t think the guy had a chance, it appeared to be an obvious paper shuffle. However, the Supreme Court of Canada held up the appeal. The interest was deductible. This is what the Court said:
“…Taxpayers are entitled to structure their transactions in a manner that reduces taxes, the fact that the structures may be complex arrangements does not remove the right to do so… It is irrelevant that… the respondent structured the transaction for tax purposes… Since fairness requires that the same legal principles must apply to all taxpayers, irrespective of their status as natural or artificial persons…”
It is the right of every Canadian to minimize their taxes, how they do so is up to them or their accountant and requires research into specking or reporting their income and expenses accordingly.
The industry is changing fast, those who find the right answers ahead of time will be prepared for the future.
Smart operators are still making money. They’re still doing ok because they thought ahead to most all the risks and pitfalls then devised a plan to minimize or even eliminate them.
Thinking ahead for your taxes is also a smart business choice. Too many drivers still have “off the lot” mentality when it comes to taxes. They think that, at the end of the year, taxes are what they are. When they drop off their shoebox full of statements and receipts they think there is no other result than the tax bill presented. This is how they’ve always done it. I hate to break it to them harshly but that’s just not true. It is no truer than specking a truck for 75 MPH and saying fuel consumption “…is what it is”.
The Canadian Tax system is complex. It is sometimes written in vague terms that are subject to considerable interpretation. It is what keeps the accounting industry hustling. The Income Tax Act says a business can deduct “a reasonable amount” of meal expenses. The Tax Law does not mention ANY number. It is the mandate of Canada Revenue Agency to determine what that amount is. Once CRA determines that maximum number for the year (or time period) it is assumed by the citizens and the tax courts to be fare, just and universal. However, this is where confusion and controversy arises.
CRA allows several different systems of reporting business income. Each system has subsequent rules assigned and the bottom line results can vary significantly. The difference is how expenses are reported and presented to CRA.
Let me give you what I consider an extreme example of difference in reporting and presenting. Singleton vs. Canada 2001 2 S.C.R. 1046, 2001 SCC 61. A lawyer took $300,000 capital out of his partnership and bought a house, then (the same day) he took out a mortgage for $300,000 and BORROWED that money to his law practice. He reported the interest on his personal home mortgage as “tax deductible”. CRA audited his return and rejected the interest. The first time I heard of the case I didn’t think the guy had a chance, it appeared to be an obvious paper shuffle. However, the Supreme Court of Canada held up the appeal. The interest was deductible. This is what the Court said:
“…Taxpayers are entitled to structure their transactions in a manner that reduces taxes, the fact that the structures may be complex arrangements does not remove the right to do so… It is irrelevant that… the respondent structured the transaction for tax purposes… Since fairness requires that the same legal principles must apply to all taxpayers, irrespective of their status as natural or artificial persons…”
It is the right of every Canadian to minimize their taxes, how they do so is up to them or their accountant and requires research into specking or reporting their income and expenses accordingly.
The industry is changing fast, those who find the right answers ahead of time will be prepared for the future.
Thursday, December 11, 2008
In defense of publicity
Well Ottawa should be relatively quiet now that the liberal musical chairs leadership campaign is over. Looks like the music stopped and the winner has his chair. Unfortunately for Bob Rae he followed the rules and kept standing as the music played. He lost his bid for leadership as Ignatieff managed to stay seated during the entire sonata, a hearty congratulations for a well run (or sat) campaign.
So… let’s get back to trucking!
The primary reason I’m abandoning politics is I wish to keep this blog an industry specific topic. One of the only reasons I deviated was that a coalition would have possibly threatened the application of subsistence allowance (per dium).
I’m going to make an assumption about our political future that will indeed be a stretch for some. I will move on and assume Ignatieff and the NDP will not get along (as opposed to Bob Rae or Dion). That’s my story and I’m sticking to it… until things change of course… then I’ll simply modify my position.
There have been several situations and conversations recently that have brought up the topic of the class action law suit. Though most opinions are anti-government or anti-court, I do have people still disturbed at the lawyers and promoters of the action. In my opinion this is a shallow response to a court loss.
The truth or facts of the case have not changed. The duplicity is still present (for those self-employed). Those participants in the action should be proud of their contribution to the entire Canadian trucking industry. Even though the case was lost in December 2006 (from a legal perspective) the publicity and national exposure was incalculable. For five years the class action kept the issue in the front of people’s minds. The issue became a place of reference for drivers. There have been very few issues (if any) that galvanized an industry as did the class action.
There were several reasons I wrote my book, one of them was the supreme court’s failure to hear the case (five months later my book was published). The end of the class action brought much despondency at the truck stops. The silence was loud, even louder than the cussing. The lunch bag let down campaign picked up the publicity but not the numbers, for clarification check out the actual after tax difference on our web sight.
Using the Tl2, 2008 provided 10.80 and will now rocket to $11.63 in 2009 giving a whole $.83 more per day (don’t spend it all in one place).
Publicity and conformity will keep subsistence allowance as a safe, equitable and profitable opportunity for Operators coast to coast. For those useing it stick together!
So… let’s get back to trucking!
The primary reason I’m abandoning politics is I wish to keep this blog an industry specific topic. One of the only reasons I deviated was that a coalition would have possibly threatened the application of subsistence allowance (per dium).
I’m going to make an assumption about our political future that will indeed be a stretch for some. I will move on and assume Ignatieff and the NDP will not get along (as opposed to Bob Rae or Dion). That’s my story and I’m sticking to it… until things change of course… then I’ll simply modify my position.
There have been several situations and conversations recently that have brought up the topic of the class action law suit. Though most opinions are anti-government or anti-court, I do have people still disturbed at the lawyers and promoters of the action. In my opinion this is a shallow response to a court loss.
The truth or facts of the case have not changed. The duplicity is still present (for those self-employed). Those participants in the action should be proud of their contribution to the entire Canadian trucking industry. Even though the case was lost in December 2006 (from a legal perspective) the publicity and national exposure was incalculable. For five years the class action kept the issue in the front of people’s minds. The issue became a place of reference for drivers. There have been very few issues (if any) that galvanized an industry as did the class action.
There were several reasons I wrote my book, one of them was the supreme court’s failure to hear the case (five months later my book was published). The end of the class action brought much despondency at the truck stops. The silence was loud, even louder than the cussing. The lunch bag let down campaign picked up the publicity but not the numbers, for clarification check out the actual after tax difference on our web sight.
Using the Tl2, 2008 provided 10.80 and will now rocket to $11.63 in 2009 giving a whole $.83 more per day (don’t spend it all in one place).
Publicity and conformity will keep subsistence allowance as a safe, equitable and profitable opportunity for Operators coast to coast. For those useing it stick together!
Tuesday, December 9, 2008
All those in favor raise your right hand... those opposed... form a coalition!
Evaluating political leaders is a slippery slope. It is almost certainly laced with personal ideological prejudice. One way to remove or minimize oneself from personal prejudice is comparing behavior with history.
Today Cincinnatus is generally referred to as a mythical character. He was the Roman general that inspired George Washington and the “Society of Cincinnati” (in honor of which the city was named). It was the equivalent of today's American Legion or VFW. As the story goes, Cincinnatus defeated the Roman enemies and saved the city of Rome. After conquering Rome's enemies he resigned as “dictator” and went back to his farm fields. This story so inspired George Washington that after defeating the British he also resigned and went home, shocking and inspiring rulers, leaders and civilizations around the globe. George Washington was an intimate part of a social movement typifying the title “civil servant”. It was a society of self sacrificing noble characters. If there is another more honorable and inspiring illustration of civil servant leadership I do not know it.
I think this is an excellent place to begin when benchmarking political leaders. Stepping down for the benefit of the whole (or as Spock said “…the needs of the many outweigh the needs of the few…”) is a noble leadership philosophy. Today however, this “steeping down as leader” is thrown around the media and parliament as rhetoric of mere “political partisanship” greatly trivializing its noble and honorable origins. The words are no longer linked to honor and integrity but used as an emotional leverage in the meager conflicts of ideology. Having two vastly different political and economic paradigms are normal in modern day democracies. Demanding “resignations” based solely on difference of opinions and ideology is senseless arrogant gibberish. It’s intellectual trash.
Canada has been exposed to too many political opportunists rather than true civil servants (sometimes humility is hard to see in the presence of such wide spread arrogance). Unfortunately the current political format is the leveraging and muscling INTO power for the benefit of the few.
Harper’s denouncing of a coalition of the liberals with the Bloc/PQ is only a hypocritical refection of “what goes around comes around” referring to his own attempt at a Bloc/PQ coalition years ago. My words would be: “…you can’t denounce today what you accepted as a tactic years ago…” Either apologize for your prior behavior or “repent” of your denouncement of the Liberal attempt. Submit YOURSELF to democracy, however difficult that position becomes for YOU or your party!
That said, let’s flip the coin, Since Dion is on his way out, the attempt to form a coalition government smells of radical desperation! To the Canadian public, it’s somewhat embarrassing (unless your passion for Liberalism/NDP policy tampers judgment). It discredits individual party platforms. It waters them down and virtually reduces the participants (especially the Liberals) to a second class party. However, its the Liberal party's choice, and it is still within our democratic process (flawed though it may be). Unfortunately, the Canadian parliamentary system does not provide a whole lot of predictable functionality in a minority setting, especially in a pluralistic atmosphere.
But that’s not all… Ignatieff’s coalition to form a coalition must be one of the most unprecedented political grasps in Canadian history (A Cincinnatus Antithesis… Oooh look I invented a new phrase). Personally, I’m frustrated! I’d rather see Ignatieff’s ideology as opposition/coalition leader than Bob Rae’s. But now I’m forced to defend Bob Rae’s kick at the can! He… de…serves…. a Lib...eral... party... vote! (Phew I could hardly get that out). Without a respectable full party inclusion vote I think the front runner would be diminishing his respectability and ultimately repeating history by blowing his lead again. He would be painting himself as a demagogue. This coalition… to form a coalition… smacks of someone desperately trying to avail themselves of the democratic process.
Unfortunately for the Liberals they have spun themselves silly. If there is a gain to be made in this coalition (I refer to the later coalition not the former) at best it will be short. Imagine how much fun the Conservatives will have in the next federal election (something we will probably have again shortly). Will Dion/Ignatieff/Rae-Layton-Duceppe campaign together? What color would their platform book be? It sure would reduce GHG to have them all on the same bus. Would they have seporate podiums at the debates or share one? I have a suggestion, if they all campaign together and they’re shooting for a Liberal Minority and their slogan is “Really Strong!” they can be the L-M-N-D-P-Q-R-S Party! It flows nicely into a jingle and is easily remembered by the younger demographics.
The coalition would stand as the desperate opportunistic “bad guy”, while the Conservatives slide into the “knight in shining armor” seat. Partisanship aside, I think Canadians don’t have a lot of faith in the concept of a coalition. Therefore we may be stuck with perpetual annual elections until ideologies soften or one ultimately dominates. All those who agree raise your right hand… those who oppose… form a coalition.
Today Cincinnatus is generally referred to as a mythical character. He was the Roman general that inspired George Washington and the “Society of Cincinnati” (in honor of which the city was named). It was the equivalent of today's American Legion or VFW. As the story goes, Cincinnatus defeated the Roman enemies and saved the city of Rome. After conquering Rome's enemies he resigned as “dictator” and went back to his farm fields. This story so inspired George Washington that after defeating the British he also resigned and went home, shocking and inspiring rulers, leaders and civilizations around the globe. George Washington was an intimate part of a social movement typifying the title “civil servant”. It was a society of self sacrificing noble characters. If there is another more honorable and inspiring illustration of civil servant leadership I do not know it.
I think this is an excellent place to begin when benchmarking political leaders. Stepping down for the benefit of the whole (or as Spock said “…the needs of the many outweigh the needs of the few…”) is a noble leadership philosophy. Today however, this “steeping down as leader” is thrown around the media and parliament as rhetoric of mere “political partisanship” greatly trivializing its noble and honorable origins. The words are no longer linked to honor and integrity but used as an emotional leverage in the meager conflicts of ideology. Having two vastly different political and economic paradigms are normal in modern day democracies. Demanding “resignations” based solely on difference of opinions and ideology is senseless arrogant gibberish. It’s intellectual trash.
Canada has been exposed to too many political opportunists rather than true civil servants (sometimes humility is hard to see in the presence of such wide spread arrogance). Unfortunately the current political format is the leveraging and muscling INTO power for the benefit of the few.
Harper’s denouncing of a coalition of the liberals with the Bloc/PQ is only a hypocritical refection of “what goes around comes around” referring to his own attempt at a Bloc/PQ coalition years ago. My words would be: “…you can’t denounce today what you accepted as a tactic years ago…” Either apologize for your prior behavior or “repent” of your denouncement of the Liberal attempt. Submit YOURSELF to democracy, however difficult that position becomes for YOU or your party!
That said, let’s flip the coin, Since Dion is on his way out, the attempt to form a coalition government smells of radical desperation! To the Canadian public, it’s somewhat embarrassing (unless your passion for Liberalism/NDP policy tampers judgment). It discredits individual party platforms. It waters them down and virtually reduces the participants (especially the Liberals) to a second class party. However, its the Liberal party's choice, and it is still within our democratic process (flawed though it may be). Unfortunately, the Canadian parliamentary system does not provide a whole lot of predictable functionality in a minority setting, especially in a pluralistic atmosphere.
But that’s not all… Ignatieff’s coalition to form a coalition must be one of the most unprecedented political grasps in Canadian history (A Cincinnatus Antithesis… Oooh look I invented a new phrase). Personally, I’m frustrated! I’d rather see Ignatieff’s ideology as opposition/coalition leader than Bob Rae’s. But now I’m forced to defend Bob Rae’s kick at the can! He… de…serves…. a Lib...eral... party... vote! (Phew I could hardly get that out). Without a respectable full party inclusion vote I think the front runner would be diminishing his respectability and ultimately repeating history by blowing his lead again. He would be painting himself as a demagogue. This coalition… to form a coalition… smacks of someone desperately trying to avail themselves of the democratic process.
Unfortunately for the Liberals they have spun themselves silly. If there is a gain to be made in this coalition (I refer to the later coalition not the former) at best it will be short. Imagine how much fun the Conservatives will have in the next federal election (something we will probably have again shortly). Will Dion/Ignatieff/Rae-Layton-Duceppe campaign together? What color would their platform book be? It sure would reduce GHG to have them all on the same bus. Would they have seporate podiums at the debates or share one? I have a suggestion, if they all campaign together and they’re shooting for a Liberal Minority and their slogan is “Really Strong!” they can be the L-M-N-D-P-Q-R-S Party! It flows nicely into a jingle and is easily remembered by the younger demographics.
The coalition would stand as the desperate opportunistic “bad guy”, while the Conservatives slide into the “knight in shining armor” seat. Partisanship aside, I think Canadians don’t have a lot of faith in the concept of a coalition. Therefore we may be stuck with perpetual annual elections until ideologies soften or one ultimately dominates. All those who agree raise your right hand… those who oppose… form a coalition.
Thursday, December 4, 2008
A change is as good as a rest? I think Canadians would like to “put to REST” Ottawa’s shenanigans.
As some of my readers may know I’m a fan of Dr. Edward Demming the bean counter of bean counters. I first read his book “Out of the Crisis” many years ago. I took my time reading it (two years). It may be more appropriate to say I took bit sized meditations of it. Even though I was used to reading textbooks and technical stuff, Dr. Demming’s book was often dry as Sahara sand and in order to keep my baby bottom complexion I had to read some of it in the shower. However, I would encourage people to at least google Dr. Demming’s 14 points and see if you can apply them to your personal life and family, better yet, how about lets apply the concept of quality to our current political environment.
Lets look at Dr. Demming’s first point: Constancy of purpose: “Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short term profitability, with a plan to become competitive, to stay in business, and to provide jobs.”
These points are not just applicable to business. If a family (for instance) invests their resources (time, effort, finances etc.) in meeting long term needs rather than just short term satisfaction, true quality will immerge.
Politically, if our government seeks to meet our long term needs rather than short term “demands” our Country would also run consistently and with purpose. However, our political system too often focuses only on how to get re-elected or “obliterate opponent’s power” rather than creating consistency of purpose. This attempt at a coalition “coup d’etat” is even shorter term political thinking than the standard preschool four year old mentality we’ve been accustomed to. It’s also an act to antagonize an already polarized (yet thankfully still civilized) society. Let’s go over the “short term” facts.
In addition to the six week old election changes (moderate though they may be) and the proposed “coup d’etat” 180 degree change (now assumed scheduled for January), the current liberal leadership race will GUARENTEE another change in leadership by May/June of 2009 (provided of course the coalition even lasts that long).
IF we reach spring without another election we have to ask “Will Layton put up with the new guy? Will the BQ put up with him? Will the outrage of the Canadian society temper or fuel further multi party shenanigans? Ultimately, can our Country even afford to have our polarized views exacerbated while plunging us into chaotic obis?
Meanwhile, back at the ranch, our globe is plunging itself into a recession/depression obis. The already financially challenged Canadian public is forced to additionally weather our own government imposed vortex of turmoil, the most inefficient, ineffective state of being civilized society can even pretend to function at. Our Country’s SURVIVAL may actually depend on constancy of purpose. A recession, a serious recession, maybe even a depression should NEVER be entered into while we operate in a state of turmoil and uncertainty. Our dollar may well be hammered like it was during the Quebec referendum (or worse). Our allies and investors have yet another reason to pull out. What greater negative global sentiment can be fostered than by political short term shenanigans?
Historians know that government spending has NEVER been more than a moderate contributor to pulling a Country from recession/depression, and that only once its “bottomed out” not while it’s still sliding down. Even if the Liberals /NDP/Bloc got a hold of the countries check book and started spending tens or even hundreds of billions of dollars immediately (in a credit crunch environment at that) to apparently “get us out of recession”, economists know it will take a minimum of several months (at best) for anyone on the street to see a penny (assuming we reached the bottom-which of course we haven’t- because they only just announced an official recession last week). Meanwhile, we could see three different Prime Ministers before anyone even cashes a check.
At the least… at the VERY least… if the Liberals truly operated in the best interest of Canada they would, upon the concession the Conservatives axing their “…gut public subsidies of political parties…”agenda, suspend the idea of a “coup” until after their OWN Liberal leadership race was concluded. But that’s probably too much to ask of children trying to play together in a sand box.
Therefore we are left with our Country presenting itself internally and globally as unstable, unpredictable and chaotic.
Nice going Parliament! Just when we need you the most you leverage the crisis to satisfy your own thirsty selfish agendas.
Lets look at Dr. Demming’s first point: Constancy of purpose: “Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short term profitability, with a plan to become competitive, to stay in business, and to provide jobs.”
These points are not just applicable to business. If a family (for instance) invests their resources (time, effort, finances etc.) in meeting long term needs rather than just short term satisfaction, true quality will immerge.
Politically, if our government seeks to meet our long term needs rather than short term “demands” our Country would also run consistently and with purpose. However, our political system too often focuses only on how to get re-elected or “obliterate opponent’s power” rather than creating consistency of purpose. This attempt at a coalition “coup d’etat” is even shorter term political thinking than the standard preschool four year old mentality we’ve been accustomed to. It’s also an act to antagonize an already polarized (yet thankfully still civilized) society. Let’s go over the “short term” facts.
In addition to the six week old election changes (moderate though they may be) and the proposed “coup d’etat” 180 degree change (now assumed scheduled for January), the current liberal leadership race will GUARENTEE another change in leadership by May/June of 2009 (provided of course the coalition even lasts that long).
IF we reach spring without another election we have to ask “Will Layton put up with the new guy? Will the BQ put up with him? Will the outrage of the Canadian society temper or fuel further multi party shenanigans? Ultimately, can our Country even afford to have our polarized views exacerbated while plunging us into chaotic obis?
Meanwhile, back at the ranch, our globe is plunging itself into a recession/depression obis. The already financially challenged Canadian public is forced to additionally weather our own government imposed vortex of turmoil, the most inefficient, ineffective state of being civilized society can even pretend to function at. Our Country’s SURVIVAL may actually depend on constancy of purpose. A recession, a serious recession, maybe even a depression should NEVER be entered into while we operate in a state of turmoil and uncertainty. Our dollar may well be hammered like it was during the Quebec referendum (or worse). Our allies and investors have yet another reason to pull out. What greater negative global sentiment can be fostered than by political short term shenanigans?
Historians know that government spending has NEVER been more than a moderate contributor to pulling a Country from recession/depression, and that only once its “bottomed out” not while it’s still sliding down. Even if the Liberals /NDP/Bloc got a hold of the countries check book and started spending tens or even hundreds of billions of dollars immediately (in a credit crunch environment at that) to apparently “get us out of recession”, economists know it will take a minimum of several months (at best) for anyone on the street to see a penny (assuming we reached the bottom-which of course we haven’t- because they only just announced an official recession last week). Meanwhile, we could see three different Prime Ministers before anyone even cashes a check.
At the least… at the VERY least… if the Liberals truly operated in the best interest of Canada they would, upon the concession the Conservatives axing their “…gut public subsidies of political parties…”agenda, suspend the idea of a “coup” until after their OWN Liberal leadership race was concluded. But that’s probably too much to ask of children trying to play together in a sand box.
Therefore we are left with our Country presenting itself internally and globally as unstable, unpredictable and chaotic.
Nice going Parliament! Just when we need you the most you leverage the crisis to satisfy your own thirsty selfish agendas.
Tuesday, December 2, 2008
Oh what a tangled web we weave...
There is nothing more thrilling for the Canadian public than a government butt whup’in. The exposure of scandals and corruption keeps the chairs at Tim Horton’s warm. So when the Conservative government announced the axing of beurocratic “perks” the average Canadian has mixed feelings. What the heck are we going to complain about now?
Initially, at least for me, the announcement was laced with jubilation and then cautious questions and concerns. First of all, why did we need an economic catastrophe to finally consider restricting the big government spenders? Or, does this mean when we come out of the recession we’ll open our taxpaying pockets all over again? Or even before we get to a recovery, is this just lip service to the panicking public? All fair questions but none of which will be answered, at least in the next year… or will they?
Axing government perks sounds prudent, self sacrificing, noble and even has a scent of Canadian pride. Proud that leadership asks “more of themselves than of its citizens”. However, the meat and potatoes of this “axing of perks” (so to speak) is not necessarily as noble a policy move as the surface reflects.
One of the perks referred to in the “axing” is the illustrious “…poison-pill-proposal to gut public subsidies of political parties….” This means that all political parties would be dependant on public contributions as their primary (or only) source of financial viability. Considering the campaign contribution reforms already enacted, (ie. $1000 maximum) it would provide the Conservative Party a phenomenal competitive advantage over virtually any other political party (considering the current balance sheet of opposition parties as well as contribution demographics). Political party finances are the entrails of future public success and failure (unless of course there is a massive grassroots network).
Gutting opposition funding (with the rationale of global economic catastrophe) is like juggling nitroglycerine, its not IF things blow up, its WHEN! It can even appear to be the antithesis of the Federal Accountabilities Act (the act that negated ruling administrations from using public funds to propagate their parties). Therefore the current thirst for a Coalition “coup d’etat” is not necessarily a greedy grab for power as much as it may be a frantic lunge to protect against certain future financial and political annihilation. It may not be openly discriminative as was the sponsorship scandal but it reflects the same outcome while staying true to the “Conservative mindset”. Though coo-does for brilliance and “spin” it certainly doesn’t reflect an atmosphere of co-operation on the floor of the House of Commons.
Personally I’m not in favor of the Government supporting political parties, however, I don’t think Canada is entirely ready for the alternative… exclusive use of public contributions.
What concerns me so much about an apparent change of administration is its possible immediate affect on CRA’s position on truckers subsistence allowance. As I stated in my book, subsistence allowance is not necesarily a matter of law but of administration. If a new administration enacts policies that hamstring the system for truckers, then the entire lease/operator industry may administratively loose their constitutional right for fair opportunity.
To adapt Sir Walter Scott “…Oh what a tangled web we weave, when first we practice politics…”
Initially, at least for me, the announcement was laced with jubilation and then cautious questions and concerns. First of all, why did we need an economic catastrophe to finally consider restricting the big government spenders? Or, does this mean when we come out of the recession we’ll open our taxpaying pockets all over again? Or even before we get to a recovery, is this just lip service to the panicking public? All fair questions but none of which will be answered, at least in the next year… or will they?
Axing government perks sounds prudent, self sacrificing, noble and even has a scent of Canadian pride. Proud that leadership asks “more of themselves than of its citizens”. However, the meat and potatoes of this “axing of perks” (so to speak) is not necessarily as noble a policy move as the surface reflects.
One of the perks referred to in the “axing” is the illustrious “…poison-pill-proposal to gut public subsidies of political parties….” This means that all political parties would be dependant on public contributions as their primary (or only) source of financial viability. Considering the campaign contribution reforms already enacted, (ie. $1000 maximum) it would provide the Conservative Party a phenomenal competitive advantage over virtually any other political party (considering the current balance sheet of opposition parties as well as contribution demographics). Political party finances are the entrails of future public success and failure (unless of course there is a massive grassroots network).
Gutting opposition funding (with the rationale of global economic catastrophe) is like juggling nitroglycerine, its not IF things blow up, its WHEN! It can even appear to be the antithesis of the Federal Accountabilities Act (the act that negated ruling administrations from using public funds to propagate their parties). Therefore the current thirst for a Coalition “coup d’etat” is not necessarily a greedy grab for power as much as it may be a frantic lunge to protect against certain future financial and political annihilation. It may not be openly discriminative as was the sponsorship scandal but it reflects the same outcome while staying true to the “Conservative mindset”. Though coo-does for brilliance and “spin” it certainly doesn’t reflect an atmosphere of co-operation on the floor of the House of Commons.
Personally I’m not in favor of the Government supporting political parties, however, I don’t think Canada is entirely ready for the alternative… exclusive use of public contributions.
What concerns me so much about an apparent change of administration is its possible immediate affect on CRA’s position on truckers subsistence allowance. As I stated in my book, subsistence allowance is not necesarily a matter of law but of administration. If a new administration enacts policies that hamstring the system for truckers, then the entire lease/operator industry may administratively loose their constitutional right for fair opportunity.
To adapt Sir Walter Scott “…Oh what a tangled web we weave, when first we practice politics…”
Thursday, November 27, 2008
The Big Three Bailout
OK… I can’t keep my opinion to myself any more. Regarding the bailout of the big three automakers. I have very deep feelings about this which is rooted in a decade or more of quazee-related research.
One cannot comment on the automakers for very long without sooner or later considering the impact one man had on the industry. His name is Dr. Edward Demming (one of my personal business hero’s). Actually his work was much broader than just the auto industry but his impact was still paramount to this topic.
Dr. Demming went from America to Japan after World War Two to help reconstruct the industry base. He was a statistician, a bean counter of bean counters. He was instrumental in assisting Japan changing from manufacturing “junk” to manufacturing “quality”.
There was a scene in Back to the Future where (I believe) the flux capacitor was “blown” on the DeLorean. Dr. Emmet Brown pulled the useless part out of the car and said something like “No wonder its blown its made in Japan”. The statement shocked Marty McFly who (as memory serves) tried to reconcile his understanding of Japan as a quality building country (in 1985) verses Emmet’s 1955 “Japan is junk” mindset. That conflict within Marty was primarily the result of Dr. Demming’s decades of work (with contemporaries such as Joseph Joran of course).
In his later years Dr. Demming was known as a rather bitter man. He was bitter because American industry refused to reevaluate their paradigms of quality. They were big, they were successful and they thought they were impenetrable. Specifically the “big three” thought they were “above questioning”. Bottom line was they were arrogant, especially GM.
In spite of the rejection by his native country, Dr. Demming continued his six sigma work in Japan (with Toyota, Honda, Suzuki and a host of other companies). In his three to four + decades of teaching, Japan was changed into a country manufacturing quality. Slowly, bit by bit, Japan’s quality ate away the big three’s market share. By the time the big three moderately humbled themselves to listen to Dr. Demmings teachings they were decades behind the competition. Even then GM (for example) never really embraced the teachings culturally (still do not in my opinion).
When I went to school we studied GM’s culture as an example of what NOT to build and embrace. Their arrogance and bullying is legendary.
Why should taxpayers “reward” top level management, unions and shortsighted shareholders with a bailout when arrogance got them into the predicament they are in? Without question, they are still trying to bully and blackmail the marketplace (now politicians) with their “economic size” (employees/voters, GDP impact etc). They are not sorry for what they did, they are sorry that they got caught! Big difference!
However, that doesn’t mean they won’t get paid. It just means they own the countries check book because they can exacerbate the panicking public’s political sentiment. Both misery and irresponsibility enjoys company.
One cannot comment on the automakers for very long without sooner or later considering the impact one man had on the industry. His name is Dr. Edward Demming (one of my personal business hero’s). Actually his work was much broader than just the auto industry but his impact was still paramount to this topic.
Dr. Demming went from America to Japan after World War Two to help reconstruct the industry base. He was a statistician, a bean counter of bean counters. He was instrumental in assisting Japan changing from manufacturing “junk” to manufacturing “quality”.
There was a scene in Back to the Future where (I believe) the flux capacitor was “blown” on the DeLorean. Dr. Emmet Brown pulled the useless part out of the car and said something like “No wonder its blown its made in Japan”. The statement shocked Marty McFly who (as memory serves) tried to reconcile his understanding of Japan as a quality building country (in 1985) verses Emmet’s 1955 “Japan is junk” mindset. That conflict within Marty was primarily the result of Dr. Demming’s decades of work (with contemporaries such as Joseph Joran of course).
In his later years Dr. Demming was known as a rather bitter man. He was bitter because American industry refused to reevaluate their paradigms of quality. They were big, they were successful and they thought they were impenetrable. Specifically the “big three” thought they were “above questioning”. Bottom line was they were arrogant, especially GM.
In spite of the rejection by his native country, Dr. Demming continued his six sigma work in Japan (with Toyota, Honda, Suzuki and a host of other companies). In his three to four + decades of teaching, Japan was changed into a country manufacturing quality. Slowly, bit by bit, Japan’s quality ate away the big three’s market share. By the time the big three moderately humbled themselves to listen to Dr. Demmings teachings they were decades behind the competition. Even then GM (for example) never really embraced the teachings culturally (still do not in my opinion).
When I went to school we studied GM’s culture as an example of what NOT to build and embrace. Their arrogance and bullying is legendary.
Why should taxpayers “reward” top level management, unions and shortsighted shareholders with a bailout when arrogance got them into the predicament they are in? Without question, they are still trying to bully and blackmail the marketplace (now politicians) with their “economic size” (employees/voters, GDP impact etc). They are not sorry for what they did, they are sorry that they got caught! Big difference!
However, that doesn’t mean they won’t get paid. It just means they own the countries check book because they can exacerbate the panicking public’s political sentiment. Both misery and irresponsibility enjoys company.
Tuesday, November 25, 2008
Some Operators Left Dangling
Though there are many large trucking companies in Canada, the industry is pretty much dominated by smaller companies. Being a lease/owner operator at a smaller company has both its advantages and disadvantages. One potential hazard that most operators don’t know about is a potential GST liability that is relatively unknown. I wrote about it in my book (chapter eight) and got a great deal of interest and comment about it.
Simply put, for each transaction within our economy that someone is claiming an ITC (Input Tax Credit), there must be a clear purchaser and a clear seller. In addition, the sellers GST must be clearly viewed.
What creates a problem between the trucking industry and GST auditors are the way about 40% of all trucking companies settle with operators. Since the vast majority of all operators use company fuel cards and trucking companies usually just photocopy fuel company statements, circling/highlighting or otherwise indicating what amount was purchased by the operator, there is no clear transaction between the operator and the trucking company. The invoices photocopied are between the fuel company and the purchaser (deemed to be the trucking company). Therefore a GST auditor may disallow all ITC’s if they so choose. The application of this GST “hazard” seems to be random and geographically sensitive, however the vulnerability for an operator is not to be underestimated.
Bottom line is that CRA has the clear authority to mandate trucking companies apply GST in their statements (and often times they have) but it is not universal. There are still some operators dangling in the wind. Unfortunately CRA is left to govern an extremely ethical dilemma.
Kindah leaves one feeling warm and fuzzy doesn’t it?
Simply put, for each transaction within our economy that someone is claiming an ITC (Input Tax Credit), there must be a clear purchaser and a clear seller. In addition, the sellers GST must be clearly viewed.
What creates a problem between the trucking industry and GST auditors are the way about 40% of all trucking companies settle with operators. Since the vast majority of all operators use company fuel cards and trucking companies usually just photocopy fuel company statements, circling/highlighting or otherwise indicating what amount was purchased by the operator, there is no clear transaction between the operator and the trucking company. The invoices photocopied are between the fuel company and the purchaser (deemed to be the trucking company). Therefore a GST auditor may disallow all ITC’s if they so choose. The application of this GST “hazard” seems to be random and geographically sensitive, however the vulnerability for an operator is not to be underestimated.
Bottom line is that CRA has the clear authority to mandate trucking companies apply GST in their statements (and often times they have) but it is not universal. There are still some operators dangling in the wind. Unfortunately CRA is left to govern an extremely ethical dilemma.
Kindah leaves one feeling warm and fuzzy doesn’t it?
Thursday, November 20, 2008
GST-HST interlining fiasco
The implementation of the HST is not as “smooth” as many might think, especially for interliners. (Interliners are lease/owner operators who run inter provincially under someone else’s running rights, they either own a truck and trailer or just a truck, they are GST zero rated, not collecting GST but able to get their GST/HST refunded)
Take the implementation of HST on an interlining highway tractor leased from a financing company. In New Brunswick the department of motor vehicle DEMANDS that all interliners show proof of HST paid. They even demand it from provinces that do not participate in HST. They demand it even though interliners already pay IRP (a pro-rated form of PST). Hold that fact.
Our federal GST auditors (when auditing interlining operators) some times refuse the ITC application of HST to lease payments (acknowledging only the 5% GST portion not the provincial portion). That means that some auditors force some operators to not only pay IRP at the time of annual registration but PST on lease payments as well. You need a good accountant to fight through this conflict.
The rejection of the HST to an interliner should not occur by an educated federal GST auditor. However, the application of HST is not a universally understood concept by our federal employees (especially in some regions of Canada). Regardless of federal shortcomings this conflict shouldn’t be present anyway. The New Brunswick DMV must be educated to the workings of inter provincial applications of GST/HST in light of IRP. Specifically there MUST be an exception made.
In summary, the DMV in the province of New Brunswick (or any other province that demands HST for interliners) is forcing the administration of HST on financing companies from other provinces. It is needless, redundant and it exposes the lease/owner operator to auditors who weave their own ignorance. Need we remind the DMV again, the province already gets their “PST” through the IRP. Demanding it through HST as well is, in my opinion, an opportunity for Provincial DOUBLE DIPPING. The province may use the application to manipulate the federal numbers so it receives a higher reimbursement than it should. At face value that’s what it looks like. If (for some reason) the province DOSN”T account for the interliners HST in their submission to federal administrators, then why is the DMV demanding extra provincial financing companies to charge HST?
Lets get this straight, either educate the HST DMV’s or the NON HST GST auditors.
Skidoosh!
Take the implementation of HST on an interlining highway tractor leased from a financing company. In New Brunswick the department of motor vehicle DEMANDS that all interliners show proof of HST paid. They even demand it from provinces that do not participate in HST. They demand it even though interliners already pay IRP (a pro-rated form of PST). Hold that fact.
Our federal GST auditors (when auditing interlining operators) some times refuse the ITC application of HST to lease payments (acknowledging only the 5% GST portion not the provincial portion). That means that some auditors force some operators to not only pay IRP at the time of annual registration but PST on lease payments as well. You need a good accountant to fight through this conflict.
The rejection of the HST to an interliner should not occur by an educated federal GST auditor. However, the application of HST is not a universally understood concept by our federal employees (especially in some regions of Canada). Regardless of federal shortcomings this conflict shouldn’t be present anyway. The New Brunswick DMV must be educated to the workings of inter provincial applications of GST/HST in light of IRP. Specifically there MUST be an exception made.
In summary, the DMV in the province of New Brunswick (or any other province that demands HST for interliners) is forcing the administration of HST on financing companies from other provinces. It is needless, redundant and it exposes the lease/owner operator to auditors who weave their own ignorance. Need we remind the DMV again, the province already gets their “PST” through the IRP. Demanding it through HST as well is, in my opinion, an opportunity for Provincial DOUBLE DIPPING. The province may use the application to manipulate the federal numbers so it receives a higher reimbursement than it should. At face value that’s what it looks like. If (for some reason) the province DOSN”T account for the interliners HST in their submission to federal administrators, then why is the DMV demanding extra provincial financing companies to charge HST?
Lets get this straight, either educate the HST DMV’s or the NON HST GST auditors.
Skidoosh!
Tuesday, November 18, 2008
Canadians and Taxes
Contrary to our Tea Party neighbors to the south, Canadians handle excess taxes in a less dramatic format. We grumble and complain over a cup of $2.49 coffee and then go home to watch skits humiliating our politicians on CBC. The general public, in general, is tolerant of almost anything. Admitedly, there has been a slight change over the last several decades as people are holding government more and more accountable.
Even still, it seems the only sector of society that is motivated enough to do anything proactive are business people. I guess it hurts that much more when you actually have to sign the check yourself.
However, there is a disturbing trend that has increased over the last few decades. Its cheating on taxes or the use of black market – under the table transactions. The people who see this more than anyone (other than maybe auditors who find the perps) are accountants. If CRA (Canada Revenue Agency) would want to check the mood-attitude-temperature of the Canadian taxpayer all they have to do is interview accountants. We hear it and sometimes see it every tax season.
Italy is a democratic country similar to Canada. Yet 25% of Italy is the underground economy (black market). It is so common place the Prime Minister (Silvio Berlusconi) once said “…if taxes are too high it is morally acceptable to evade them…”.
Does our government want to go the route of Italy? If CRA continues to support duplicity, human nature will escort our predicament down the path to Italy.
Justice inspires justice! Come-on Ottawa do the right thing!
Even still, it seems the only sector of society that is motivated enough to do anything proactive are business people. I guess it hurts that much more when you actually have to sign the check yourself.
However, there is a disturbing trend that has increased over the last few decades. Its cheating on taxes or the use of black market – under the table transactions. The people who see this more than anyone (other than maybe auditors who find the perps) are accountants. If CRA (Canada Revenue Agency) would want to check the mood-attitude-temperature of the Canadian taxpayer all they have to do is interview accountants. We hear it and sometimes see it every tax season.
Italy is a democratic country similar to Canada. Yet 25% of Italy is the underground economy (black market). It is so common place the Prime Minister (Silvio Berlusconi) once said “…if taxes are too high it is morally acceptable to evade them…”.
Does our government want to go the route of Italy? If CRA continues to support duplicity, human nature will escort our predicament down the path to Italy.
Justice inspires justice! Come-on Ottawa do the right thing!
Thursday, November 13, 2008
Automobile Travel Costs
Not that meal expenses are no longer an issue, but I want to continue the exposure of our duplicitous income tax system and its impact on Canada Truck Operators.
The vast majority of operators in Canada are self employed. It’s not that there was much of a choice when operators became popular in the 1980’s. It was the cheapest and most obvious option at the time. However, the quickest and cheapest option is not always the best choice. I’m not blaming those who decided the trend because it seemed pretty obvious at the time.When a business chooses self employed status they must follow the rules and regulations associated with that method. Unfortunately comparing a self employed business with employer-employee agreements is rather sobering. The restrictions and benefits are just not the same. The primary benefit of self-employment is the ease of entry and the ease of exit not the efficiency of taxes or even recordkeeping.
Vehicle travel costs or business use of personal vehicle in the self employed method has radically different requirements than the “estimated reimbursement for job related costs” method. For example: fuel receipts, maintenance receipts, insurance and depreciation costs are all needed for self employed records, however non of that is needed for the estimated method.
If you use a personal vehicle for business travel there is one primary question that must be asked. Considering all the expenses how much is personal and how much is business? Personal miles are not tax deductible (obviously) so the system has to be able to compare them to the tax deductible business miles.
This brings in the most loathed aspect to personal vehicle business travel. On top of keeping every kind of receipt applicable to the vehicle, the self-employed business owner must keep a vehicle log that keeps track of both personal and business miles. It’s not an unreasonable request. There must be a way to calculate the ratio or percentage of personal to business in each vehicle used. At the end of the year or period the percentage is applied to the total of all receipts and expenses. For example if, over the period, 18% of all miles is business than only 18% of all expenses/receipts are tax deductible.
That’s a lot of paperwork, a lot of details needed to be recorded, sometimes every day. This method is about as labor intensive and time consuming as possible. If a business owner alternates between two or more vehicles then separate receipts and separate logs are required for each vehicle. Bummer!
Even though many accountants coast to coast imply and even say log books aren’t necessary they most certainly are (under audit). The only reason auditors may overlook log books is ignorance, passivity, or generosity. Over many years and even decades disinformation about log books has led many self employed people to lax and irresponsible record keeping. But enough about the method itself, lets go to comparing benefits.
With a proper agreement in place, employees and employers have greatly reduced paperwork and greatly enhanced benefits. Whereas the self employed method works on actual costs (applying them as expenses) the employee agreements provide a deduction to the employer and cash to an employee (no receipts needed). What makes the method so beneficial is the dollar amount an employer can provide an employee for the use of their vehicle. See current rate chart .
Using Ontario as an example, an employee can receive 55.5 tax free cents per KM for each business KM driven (that's 90 cents per mile). Unless you have a Hummer or a Ferrari and doing break stands at every stop sign, using these rates you can make good after tax money. If you can drive your vehicle for less than 55.5 cents per KM in Ontario the difference is pocketed tax free as a "nontaxable benefit.. pretty cool!
These two methods are dramatically different. The net after tax difference can be substantial. The average vehicle is usually able to perform at approximately 2/3 of cost. That means a net after tax benefit of about $.19 cents per KM in Ontario.
Comparing the after tax benefit of the self employed method with the employee agreement method can be a journey with exponential results. Efficiency of your vehicle combined with the cents per KM rate determines the net after tax benefit. However, the average operator may not use their personal vehicle enough to provide HUGE savings, however if they record a considerable volume it may make hundreds and even thousands of dollars over a year.
This tax example is another illustration of how choosing your business tax method is critical to your annual tax bill.
The vast majority of operators in Canada are self employed. It’s not that there was much of a choice when operators became popular in the 1980’s. It was the cheapest and most obvious option at the time. However, the quickest and cheapest option is not always the best choice. I’m not blaming those who decided the trend because it seemed pretty obvious at the time.When a business chooses self employed status they must follow the rules and regulations associated with that method. Unfortunately comparing a self employed business with employer-employee agreements is rather sobering. The restrictions and benefits are just not the same. The primary benefit of self-employment is the ease of entry and the ease of exit not the efficiency of taxes or even recordkeeping.
Vehicle travel costs or business use of personal vehicle in the self employed method has radically different requirements than the “estimated reimbursement for job related costs” method. For example: fuel receipts, maintenance receipts, insurance and depreciation costs are all needed for self employed records, however non of that is needed for the estimated method.
If you use a personal vehicle for business travel there is one primary question that must be asked. Considering all the expenses how much is personal and how much is business? Personal miles are not tax deductible (obviously) so the system has to be able to compare them to the tax deductible business miles.
This brings in the most loathed aspect to personal vehicle business travel. On top of keeping every kind of receipt applicable to the vehicle, the self-employed business owner must keep a vehicle log that keeps track of both personal and business miles. It’s not an unreasonable request. There must be a way to calculate the ratio or percentage of personal to business in each vehicle used. At the end of the year or period the percentage is applied to the total of all receipts and expenses. For example if, over the period, 18% of all miles is business than only 18% of all expenses/receipts are tax deductible.
That’s a lot of paperwork, a lot of details needed to be recorded, sometimes every day. This method is about as labor intensive and time consuming as possible. If a business owner alternates between two or more vehicles then separate receipts and separate logs are required for each vehicle. Bummer!
Even though many accountants coast to coast imply and even say log books aren’t necessary they most certainly are (under audit). The only reason auditors may overlook log books is ignorance, passivity, or generosity. Over many years and even decades disinformation about log books has led many self employed people to lax and irresponsible record keeping. But enough about the method itself, lets go to comparing benefits.
With a proper agreement in place, employees and employers have greatly reduced paperwork and greatly enhanced benefits. Whereas the self employed method works on actual costs (applying them as expenses) the employee agreements provide a deduction to the employer and cash to an employee (no receipts needed). What makes the method so beneficial is the dollar amount an employer can provide an employee for the use of their vehicle. See current rate chart .
Using Ontario as an example, an employee can receive 55.5 tax free cents per KM for each business KM driven (that's 90 cents per mile). Unless you have a Hummer or a Ferrari and doing break stands at every stop sign, using these rates you can make good after tax money. If you can drive your vehicle for less than 55.5 cents per KM in Ontario the difference is pocketed tax free as a "nontaxable benefit.. pretty cool!
These two methods are dramatically different. The net after tax difference can be substantial. The average vehicle is usually able to perform at approximately 2/3 of cost. That means a net after tax benefit of about $.19 cents per KM in Ontario.
Comparing the after tax benefit of the self employed method with the employee agreement method can be a journey with exponential results. Efficiency of your vehicle combined with the cents per KM rate determines the net after tax benefit. However, the average operator may not use their personal vehicle enough to provide HUGE savings, however if they record a considerable volume it may make hundreds and even thousands of dollars over a year.
This tax example is another illustration of how choosing your business tax method is critical to your annual tax bill.
Monday, November 10, 2008
The TL2 Dilemma
About the industries use of the TL2.
Prior to about winter of 2006-2007 CRA was allowing lease/owner operators to use meal expenses as presented on a TL2 (simplified method), even though the form is clearly designed for an employer employee relationship. Historically CRA not only allowed operators to file a TL2 but trained auditors, operators, and accountants how to fill them out. Twenty years of use and training was eliminated one day when CRA announced that TL2’s for lease/owner operators have NEVER been acceptable. It’s one thing to say they can no longer be used its another to say they have never been available. It’s not that they’re wrong, its that they practiced allowing it for 20 years then suddenly changed their mind, confusing the industry.
I have a personal opinion of why they may have done it. Here goes. The Don Wilkenson court case (Aug 2003) proved the guidelines ($33.00 per day at the time) was not “reasonable” and therefore not held up in court. Since then (unfortunately… or fortunately) accountants and operators coast to coast have inserted their own numbers. To stop (or at least slow down) the progression of operators using both the TL2 and higher numbers than the guidelines, CRA eliminated the TL2 entirely (somewhat an example of a few bad guys spoiling it for the majority good guys). I assume it was easier for CRA to eliminate the TL2 than to defend any number in court greater than the guidelines but less than or equal to the Treasury board of Canada numbers.
The timing of this crisis however, hits operators hard. Just as they suddenly appeared to have meal expense reprieve from the lunch bag letdown campaign (increase from 50% to 80% March 19, 2007 Federal budget) they are struck with the lack of access to the TL2. The effect is dramatic. Operators only keep about $20-$25 per day of receipts (on average) and are still subject to the same reductions as the guidelines ($51, the amount offered without need of receipts). The national effect is actually about a 50% REDUCTION in meal allowance writeoffs. The shift of take home income advantage from self-employed operator (owning your own) to employee just rocketed towards the employee. A net effect many may not have calculated on. Bummer!... at least those who are still self-employed.
Historically its just one more example of how the implied best system available, is NOT the best! It is laced with holes of vulnerability. In my opinion equality will NEVER be implemented using the self employed system/method.
PS. My first week of blogging has received a huge volume of hits (I’m displaying hits where I thought I’d be in 1-2 years not 5-7 DAYS). However, I have no comments. I have to admit I’m new at this form of communication. I’d like to get to know my audience. I welcome your comments and questions.
Prior to about winter of 2006-2007 CRA was allowing lease/owner operators to use meal expenses as presented on a TL2 (simplified method), even though the form is clearly designed for an employer employee relationship. Historically CRA not only allowed operators to file a TL2 but trained auditors, operators, and accountants how to fill them out. Twenty years of use and training was eliminated one day when CRA announced that TL2’s for lease/owner operators have NEVER been acceptable. It’s one thing to say they can no longer be used its another to say they have never been available. It’s not that they’re wrong, its that they practiced allowing it for 20 years then suddenly changed their mind, confusing the industry.
I have a personal opinion of why they may have done it. Here goes. The Don Wilkenson court case (Aug 2003) proved the guidelines ($33.00 per day at the time) was not “reasonable” and therefore not held up in court. Since then (unfortunately… or fortunately) accountants and operators coast to coast have inserted their own numbers. To stop (or at least slow down) the progression of operators using both the TL2 and higher numbers than the guidelines, CRA eliminated the TL2 entirely (somewhat an example of a few bad guys spoiling it for the majority good guys). I assume it was easier for CRA to eliminate the TL2 than to defend any number in court greater than the guidelines but less than or equal to the Treasury board of Canada numbers.
The timing of this crisis however, hits operators hard. Just as they suddenly appeared to have meal expense reprieve from the lunch bag letdown campaign (increase from 50% to 80% March 19, 2007 Federal budget) they are struck with the lack of access to the TL2. The effect is dramatic. Operators only keep about $20-$25 per day of receipts (on average) and are still subject to the same reductions as the guidelines ($51, the amount offered without need of receipts). The national effect is actually about a 50% REDUCTION in meal allowance writeoffs. The shift of take home income advantage from self-employed operator (owning your own) to employee just rocketed towards the employee. A net effect many may not have calculated on. Bummer!... at least those who are still self-employed.
Historically its just one more example of how the implied best system available, is NOT the best! It is laced with holes of vulnerability. In my opinion equality will NEVER be implemented using the self employed system/method.
PS. My first week of blogging has received a huge volume of hits (I’m displaying hits where I thought I’d be in 1-2 years not 5-7 DAYS). However, I have no comments. I have to admit I’m new at this form of communication. I’d like to get to know my audience. I welcome your comments and questions.
Friday, November 7, 2008
Qualification: another tax angle
Let’s look at these differences from another angle. Too often the differences are just boiled down to dollars and sense. In the application of taxes, or more specifically expenses, some times the differences come in simple qualification rather than numbers.
Meals for truck drivers (employees) are channeled through a form called a TL2. Without going into details of the simplified method, lets just say most drivers still use it and try to conform to several restrictions associated with the gross $51.00 per day allowance.
Restrictions for qualification come in both time and distance. The driver must be gone from his/her municipality for 24 hours or more and the driver must be 160 KM from his/her municipality.
In the comparison to the other meal system (estimated reimbursement for job related costs) the rules are completely different. Restrictions and qualifications are determined by an Employer Employee Agreement. These are and can be as varied as employees, unions and job titles themselves. However, let me give you one as an example. If the employee leaves their home before eight in the morning they qualify for breakfast. If they leave after eight am they are only allowed to collect re-imbursement on lunch (and onward if applicable).
So, as we see, certain citizens qualify on a meal to meal basis (no distance restriction at all) while other citizens are hamstrung by time and distance.
If a CRA auditor looked at the log of a driver who left at 7:45am on a Monday who returned at 6:00am Tuesday morning they would disqualify the trucker for the TL2 $51.00 meal allowance. No reductions, no allowance at all. It was as if they never ate a single meal in almost 24 hours.
This constraint (and many others) is totally government imposed. In other words the administration can change this restriction on any future budget. Nothing is secure, nothing is predictable. Changing these rules is a matter of: government greed, lobbying, public exposure and political will.
The only other tax option is for drivers to keep every meal receipt (an option CRA would love, seeing that most drivers in general would loathe the imposition). If a driver is gone all day, stuck in their truck, they still may not claim one penny of TL2 job related meal costs according to the qualifications stipulated. In this situation the qualification difference is not just 926% or 1200+% but INFINITE. One citizen qualifies absolutely and the other absolutely not.
This administrative strangulation to the trucking industry is, in my opinion, one of the primary reasons the industry struggles to attract and keep qualified employees. It is not only what they have done, or what they are doing but it is the fact that the entire tax system is vulnerable to tampering. Who would want to become perpetually vulnerable in their career?
The solution is and will always be total and absolute equality. Specifically lease/owner operators can achieve this almost instantly by having an employer employee contract with their employer (a corporation that they own themselves). Using their log books as official documentation for on and off travel status, operators can qualify for the benefits exactly the same as the most generous of employer contracts accepted by CRA. Skidoosh
Meals for truck drivers (employees) are channeled through a form called a TL2. Without going into details of the simplified method, lets just say most drivers still use it and try to conform to several restrictions associated with the gross $51.00 per day allowance.
Restrictions for qualification come in both time and distance. The driver must be gone from his/her municipality for 24 hours or more and the driver must be 160 KM from his/her municipality.
In the comparison to the other meal system (estimated reimbursement for job related costs) the rules are completely different. Restrictions and qualifications are determined by an Employer Employee Agreement. These are and can be as varied as employees, unions and job titles themselves. However, let me give you one as an example. If the employee leaves their home before eight in the morning they qualify for breakfast. If they leave after eight am they are only allowed to collect re-imbursement on lunch (and onward if applicable).
So, as we see, certain citizens qualify on a meal to meal basis (no distance restriction at all) while other citizens are hamstrung by time and distance.
If a CRA auditor looked at the log of a driver who left at 7:45am on a Monday who returned at 6:00am Tuesday morning they would disqualify the trucker for the TL2 $51.00 meal allowance. No reductions, no allowance at all. It was as if they never ate a single meal in almost 24 hours.
This constraint (and many others) is totally government imposed. In other words the administration can change this restriction on any future budget. Nothing is secure, nothing is predictable. Changing these rules is a matter of: government greed, lobbying, public exposure and political will.
The only other tax option is for drivers to keep every meal receipt (an option CRA would love, seeing that most drivers in general would loathe the imposition). If a driver is gone all day, stuck in their truck, they still may not claim one penny of TL2 job related meal costs according to the qualifications stipulated. In this situation the qualification difference is not just 926% or 1200+% but INFINITE. One citizen qualifies absolutely and the other absolutely not.
This administrative strangulation to the trucking industry is, in my opinion, one of the primary reasons the industry struggles to attract and keep qualified employees. It is not only what they have done, or what they are doing but it is the fact that the entire tax system is vulnerable to tampering. Who would want to become perpetually vulnerable in their career?
The solution is and will always be total and absolute equality. Specifically lease/owner operators can achieve this almost instantly by having an employer employee contract with their employer (a corporation that they own themselves). Using their log books as official documentation for on and off travel status, operators can qualify for the benefits exactly the same as the most generous of employer contracts accepted by CRA. Skidoosh
Monday, November 3, 2008
Truckers Income Tax Comparisons
In Pursuit Of Equality
To launch “Canada Truck Operators” (my industry analysis blog) I choose to start with a detailed analysis of the tax implications on Canadian trucker’s meals. It’s a hot steamy topic that has been rightfully on the minds of most Canadian truckers for over a decade. Though my research goes back 25 years I chose to only start my chart at 1992 because the prior values are pretty much the same trajectory.
What boils my potatoes more than any other data is the impact of the 1994 budget and it’s gross misrepresentation to the public and the industry. If anyone remembers, the Prime Minister at the time stated “…there are some industries that are not paying their fair share of taxes…”. The party at the time then proceeded to CUT the deductibility of meals to truckers. Even though, according to the data presented, the truck drivers were already OVER paying their fair share of taxes.
When government stands behind a microphone and says something, does anyone hold them accountable? In 1994 the government FLAT OUT LIED! It’s no wonder that Canadians complain about their government so much. People rarely trust someone who twists the facts.
What is also misleading is the effect the “lunch bag letdown” campaign actually had on justice and equality. I projected the net effect to 2011 to show that the most conservative case still shows a difference of 649% ($74.67). Let’s remember, once it bottoms at 649% (in 2011) the percentage will once again start creeping upwards.
I’m not interested in political spin games or smoke and mirrors, only cold hard facts, justice and equality. I believe the more the public and the industry truly knows the facts, the more accountable our government will be.
Fully implemented to the lease/owner operator sector of the trucking industry, equality will provide anywhere from $100-200 million dollars per year. That’s $6-8000 in tax reduction per operator… PER YEAR! Not an insignificant amount.
One of my personal desires is to expose the truth to as many drivers as possible and set the industry on the road to justice, equality, sound business practices and the removal of needless government meddling. This may take many years but I believe it can be done, and in a way Canadians can be proud of.
In this case the Canadian Charter of Rights and Freedoms 15.1 is similar to the Ontario speed limit. It looks pretty when posted but seldom enforced.
To launch “Canada Truck Operators” (my industry analysis blog) I choose to start with a detailed analysis of the tax implications on Canadian trucker’s meals. It’s a hot steamy topic that has been rightfully on the minds of most Canadian truckers for over a decade. Though my research goes back 25 years I chose to only start my chart at 1992 because the prior values are pretty much the same trajectory.
What boils my potatoes more than any other data is the impact of the 1994 budget and it’s gross misrepresentation to the public and the industry. If anyone remembers, the Prime Minister at the time stated “…there are some industries that are not paying their fair share of taxes…”. The party at the time then proceeded to CUT the deductibility of meals to truckers. Even though, according to the data presented, the truck drivers were already OVER paying their fair share of taxes.
When government stands behind a microphone and says something, does anyone hold them accountable? In 1994 the government FLAT OUT LIED! It’s no wonder that Canadians complain about their government so much. People rarely trust someone who twists the facts.
What is also misleading is the effect the “lunch bag letdown” campaign actually had on justice and equality. I projected the net effect to 2011 to show that the most conservative case still shows a difference of 649% ($74.67). Let’s remember, once it bottoms at 649% (in 2011) the percentage will once again start creeping upwards.
I’m not interested in political spin games or smoke and mirrors, only cold hard facts, justice and equality. I believe the more the public and the industry truly knows the facts, the more accountable our government will be.
Fully implemented to the lease/owner operator sector of the trucking industry, equality will provide anywhere from $100-200 million dollars per year. That’s $6-8000 in tax reduction per operator… PER YEAR! Not an insignificant amount.
One of my personal desires is to expose the truth to as many drivers as possible and set the industry on the road to justice, equality, sound business practices and the removal of needless government meddling. This may take many years but I believe it can be done, and in a way Canadians can be proud of.
In this case the Canadian Charter of Rights and Freedoms 15.1 is similar to the Ontario speed limit. It looks pretty when posted but seldom enforced.
Friday, October 31, 2008
Postponed Blog Launch
Unfortunately do to circumstances beyond our control the launch of the research data blog has been postponed to Tuesday November 4th. Please keep posted.
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