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.