BEWARE OF DRIVER CONTRACTS...

Though this blog doesn’t get many comments I regularly receive responses directly by e-mail. The other day through various circumstances I received a copy of a “driver contract”. For obvious reasons I won’t share who it came from. Here is a condensed outline:

1) Driver’s name:_________________
2) _______ cents/mile for the month… etc.
3) A $300 per week ($1200 per month) for road allowance is deducted prior to payroll deductions in lieu of TL2.
4) A phone allowance… etc.
5) Health benefits… etc.

Item 2) shows the individual gets a cent per mile “gross” and item 3) shows a road allowance deducted off gross. This means the rate of pay is entirely based on cents per mile while “subsistence/per diem/road allowance” is deducted as a portion off the gross.

No matter how a person explains this or defends this it will NOT pass a non-taxable benefit audit. As I have stated many times before subsistence/meal allowance/per diem MUST be paid BY THE DAY and independent of productivity pay. I’m not trying to be a smarty pants, I’m trying to save people a mountain of headaches, penalties and interest. I repeat, this contract will NOT stand up to an audit!

In an audit the truck driver will be reassessed based on the gross (before road allowance deduction), therefore the tax deducted will be far too small (ie big tax bill). T4’s will be RE-ISSUED and both EI and CPP will be assigned as penalties to the trucking company. Additionally, holiday pay can be assessed on the $1200.

The risk to driver and company is outrageous with no benefits whatsoever unless both the company and driver are never audited. If you are a driver or a company that uses a contract like this please, for your own sake, stop immediately!

In my book I went through the application of subsistence to a trucking company. The national implications are bold and somewhat risky (to the company if they hire a lazy character). It can be done, probably in the next ten years it will be done but not like the example above. If companies try and cut corners and have the best of both worlds like this contract tries to, there will be screaming “Nay Sayers” coast to coast when re-assessments are issued. Do it right or don’t do it at all! This above mentioned contract places risk on both driver and company. STAY AWAY from this!

There is a way to do it legally but it’s almost triple the paperwork and the risk to the DRIVER is substantial. It will also produce a moderate risk to the company if the driver is lazy. For both these reasons I will not publicly explain how to do it. You can contact my office if you like but I’m not convinced of the national benefit of having companies hold that much power over individual drivers.

My goal is to have subsistence allowance applied the way it is designed to be, as a daily reimbursement of job related costs! Personally I don’t think the trucking industry is financially or emotionally mature enough to carry the responsibility of it. Some will undoubtedly desire to, but the pressures of the industry will financially hammer them back into the old mold.

That’s my story and I’m sticking to it!