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?