My May 3rd post is still very accurate... The markets are lurching and twisting. Many articles have come out showing an increase in freight volume and even rates. Don't get sucked in, it's temporary and its moderate. The fundamentals of the US ecomomy are still very grim. Obamanomics is perpetuating fear and uncertainty. This breeds conservative business reactions (no expansion, no hiring). Forget about Canada the US public mindset is still in the throws of recession no matter what the media propogates. A lot of the really "BAD" news still isn't hitting the main stream media, such as over a million backlogged home forclosures just to name one. Cap'n trade will be a spike in the coffin of the trucking industry. If it passes (low chance actually... at least according to current estimations) there will be HUGE polorization as some companies try and accomodate the political effects while others hedge against application. It'll create two approaches: old equipment-low overhead-low investment-dynamic business plans verses new equipment-higher overhead-higher investment-static business plans. The former approach will hedge their models on cap'n trade being recinded (if passed) while the latter embraces the "new" political paradym.
Canadian Lease/Owner operators should have one model... the first. The outcome is still far too complex to determine. In times of high volatility and risk minimise your exposure... in other words, get out of debt, stay out of debt... reduce your risk!
About Me
Sunday, July 18, 2010
Monday, May 3, 2010
RECOVERY????
These economic times are not like history. Though indicators are up (for trucking) it is too early to express investment optimism. The US debt levels are at historic levels and do not indicate ANY reversal. Greek bonds were just rated as JUNK and the Euro plunged (US rose). These knee jerk reactions are just temporary. The entire global monetary system is in jepardy since governments around the world have been borrowing for decades. They are all monetarising their debt (printing money). Eventually this "fix" will fail as currencies from all around the world will collapse (simultaneously... within months of each other). Sounds drastic... it is. There are only a few situations that will reverse this slide down slippery slope. The US must stop borrowing, and reduce their governemnt spending by dramatic percentages (25-60%). I personally think this will not be possible or probable. THis means that some time in the next ten years or so global currency will be devalued. The eventual outcome has too many variables to call but serious non the less.
Any "recovery" will be lurching and grinding, false starts, turnarounds and setbacks. Lanes will shift, money will be made and lost over night...
This means that the only thing that is truely "safe" will be assets free of debt/leins. Look at what happened to Europe when they changed their currency, convertions killed equity and buying power of citizens. Very turbulent times. Even if I am wrong in my predictions, the advice is still good.... get out of debt, stay out of debt, equipment valuations should be primarily on fuel economy! NEVER upgrade equipment for tax purposes or because of company demands! FUEL ECONOM, FULE ECONOMY!, FUEL ECONOMY!
Any "recovery" will be lurching and grinding, false starts, turnarounds and setbacks. Lanes will shift, money will be made and lost over night...
This means that the only thing that is truely "safe" will be assets free of debt/leins. Look at what happened to Europe when they changed their currency, convertions killed equity and buying power of citizens. Very turbulent times. Even if I am wrong in my predictions, the advice is still good.... get out of debt, stay out of debt, equipment valuations should be primarily on fuel economy! NEVER upgrade equipment for tax purposes or because of company demands! FUEL ECONOM, FULE ECONOMY!, FUEL ECONOMY!
Monday, December 21, 2009
A little of what I see coming
Canada has intimate ties with United States. In fact 80% of our economy is based on US consumption. This means that whether we like it or not as goes the US so goes Canada.
This has huge implications. When Harper decides what to do with GHG he rightfully “dovetailed” his position to the US. It makes no sense to do anything else. When we choose a monetary policy we have to consider what the US is doing and “dovetail” our response accordingly. It’s not that we’re absolutely powerless or mere puppets, but we have to consider our circumstances and surroundings. This is why Canadians need to know what’s happening in the US and plan/project/prepare ahead.
The US is going through a “civil war”, not with guns and bullets but with political philosophy. The majority of US is right of center. When Congress was majority Republican they did not act so. The people rejected them and Democrats took over. Obama rose to prominence as a relatively unknown. He stood on two platforms that appealed to a lot of moderate republicans, “”balanced budget” and “accountability/transparency”. What is happening now (primarily from tea parties) is a huge rejection of government (41% prefer an independent approach). THESE NUMBERS ARE HUGE! Canada took over twenty years to get a grassroots with ¾ of that percentage (Preston Manning to Harper). Politically the US are activist and move much faster than Canadians. Therefore, having said all that what can I say about our future policy? Here are a couple of my conclusions:
There is a good chance Cap’n trade will die! The strong right movement in the States will overturn the EPA (along with “climate-gate”). The 2010 elections will move congress to a “stalemate” (at least). If Obama ends up being a one term President the EPA “promises” will be empty air. If the next president radically cuts government spending then monetarily the US will be dependant on perception of the treasury board strength (audit wise). They will have their currency devalued by 50-75% (or more depending on stability). Canada will have to follow because too much of our economy depends on them (Europe will try not to but probably will). Inflation and possibly hyper-inflation may be the worlds fate (short term minimum long term possibly).
Transportation will always be important. However, depending on what the US does, Canada’s shipping lanes will settle and plunge settle and plunge. The surge of instability will be reflected on the highway. It will bring opportunity and devastation, sometimes in the same day. Best advice is…. Get out of debt, stay out of debt! Don’t invest anything unless you can afford to write it all off.
This has huge implications. When Harper decides what to do with GHG he rightfully “dovetailed” his position to the US. It makes no sense to do anything else. When we choose a monetary policy we have to consider what the US is doing and “dovetail” our response accordingly. It’s not that we’re absolutely powerless or mere puppets, but we have to consider our circumstances and surroundings. This is why Canadians need to know what’s happening in the US and plan/project/prepare ahead.
The US is going through a “civil war”, not with guns and bullets but with political philosophy. The majority of US is right of center. When Congress was majority Republican they did not act so. The people rejected them and Democrats took over. Obama rose to prominence as a relatively unknown. He stood on two platforms that appealed to a lot of moderate republicans, “”balanced budget” and “accountability/transparency”. What is happening now (primarily from tea parties) is a huge rejection of government (41% prefer an independent approach). THESE NUMBERS ARE HUGE! Canada took over twenty years to get a grassroots with ¾ of that percentage (Preston Manning to Harper). Politically the US are activist and move much faster than Canadians. Therefore, having said all that what can I say about our future policy? Here are a couple of my conclusions:
There is a good chance Cap’n trade will die! The strong right movement in the States will overturn the EPA (along with “climate-gate”). The 2010 elections will move congress to a “stalemate” (at least). If Obama ends up being a one term President the EPA “promises” will be empty air. If the next president radically cuts government spending then monetarily the US will be dependant on perception of the treasury board strength (audit wise). They will have their currency devalued by 50-75% (or more depending on stability). Canada will have to follow because too much of our economy depends on them (Europe will try not to but probably will). Inflation and possibly hyper-inflation may be the worlds fate (short term minimum long term possibly).
Transportation will always be important. However, depending on what the US does, Canada’s shipping lanes will settle and plunge settle and plunge. The surge of instability will be reflected on the highway. It will bring opportunity and devastation, sometimes in the same day. Best advice is…. Get out of debt, stay out of debt! Don’t invest anything unless you can afford to write it all off.
Monday, September 28, 2009
Speed Limiter Debate gains Momentum
Several years ago I worked with a lease/owner operator who got into an accident. He damaged a trailer. The damages totaled $2664.00 (so he was told, he never received an invoice). His deductible, clearly labeled on his signed contract, was $2500 yet the company removed the entire amount from his statement. He asked the controller why he charged the extra $164. The reply was “…we didn’t put it through insurance…”. The operator calmly and rationally tried to reason with the controller to get back his $164. It was no use! The company stood by their flawed logic and ignored their written contract. They had his money and nothing short of a law suite would change it. I had another operator who experienced the exact same situation and flawed logic but that time the damage was $5700 ($3200 above deductible).
Flawed logic is a form of deception, an action designed to distract someone from the glaring facts. This intellectual “slight of hand” is similar to strategic misdirection or “spin”. Call me old fashioned but to me a spin doctor is just a fancy word for professional liar. Imagine an occupation that pays people to lie and on a sliding scale, the better the liar the higher the pay.
There are many professions and industries that require “spin”. The most infamous work(ed) in the tobacco industry. They funded millions of dollars of “research” to “prove” that tobacco didn’t cause cancer. However, when the truth finally came out in court the industry coughed up BILLIONS.
The speed limiter debate is not without its own spin doctors. Let’s first look at the facts on how the law is administered. Let’s see where the liability or punishment is placed and what affect it has on the industry. On July 3rd I talked with a company driver who got a fine of $390.00 for driving a truck that is “non-compliant”. He asked his boss many times when he was going to “emasculate” it. The procrastinating employer kept saying “don’t worry” blah, blah, blah… He’ll pay the fine if there is one. Needless to say the driver had to keep working (wife-three kids-mortgage). Then he got checked. When he delivered the ticket, his boss still agreed to pay it (luckily) but he found out two things along the way: first the ticket goes on his personal abstract (apparently no demerits), second there was NO fine for the owner, it doesn’t even go on his CVOR scoring (MAYBE in the future but not now). It therefore appears the application of speed limiters is a simple punishment and tax on helpless drivers, not on non-compliant companies. The driver I mentioned had absolutely no physical or legal opportunity to comply. His only option was to refuse to work and therefore refuse to pay his mortgage and feed his wife and kids. In effect, this legislation places the ENFORCENENT of a law firstly on the pocketbook of the DRIVER yet ignoring the ones with authority.
Secondly let’s consider the evidence trail of how the speed limiter legislation was lobbied (spun). It was promoted as reducing both accidents and the industries carbon footprint (GHG). The argument originated from the OTA spin doctors who were successful in rejecting or ignoring all other evidence: University of Manitoba’s Barry E. Prentice’s excellent article June 2008, Transport Canada Studies released July 4th (not even three weeks after the vote), the notorious “public meeting” shame, and many others. The OTA’s spin is complete with its truth’s, half truths or maybe even full out lies. We shouldn’t be shocked at this. “Spinning” may well be a large part of David Bradley’s job description.
There are some truth’s mildly associated with the spin. The 400 series highways may well carry the majority of freight travel in Ontario. The 401 highway alone accommodates over 400,000 vehicles per day and is one of the busiest highways in the WORLD! One contributing factor of the volume is the speed the vehicles are allowed to travel. If the OPP actually enforced the speed limit the volume would decrease as congestion increased. Slowing down trucks and implying it doesn’t affect congestion should insult intelligent people. It is mathematically impossible!
The half truth about accidents is that speed kills. Of course speed kills, especially when its 80,000 lbs, but speed alone doesn’t kill, especially with heavy trucks. It’s the passing that creates the danger. Therefore, logically, the speed limiters actually INCREASE danger rather than decrease it (this logic was brought out by Mr. Prentice’s article but flat out ignored by the MTO). It was bad enough changing lanes going the same speed as the four wheelers, now try changing lanes going 15kmh slower than the 399,999 Mario Andretti’s. There is a direct correlation between the time of day traveling and the volume of urban fingers you get. But, if you are collecting fingers, there is more to consider than just time of day. The flat as a pancake 400 series thoroughfare does not represent the entire contour of Ontario. It has lower grades than Uncle Buck.
Traveling Hwy 17 has become a real crap shoot. Consider the hill near Roseport, which used to be climbed without gearing down (all-be-it approaching over speed limit). It must now be ascended in the basement (results slightly vary depending on gear configuration of course). A fully loaded tri-axle hitting the base of the hill at 112 KMH can stay in top gear right to the peak. However, just 7 KMH slower (combined with a delayed electronic kick in) has the driver pumping down gears till he’s crawling up at about 35 KMH (a perfect opportunity for collecting rural fingers). Since most drivers are paid by the mile the speed limiter reduces wages to about $8.64 per hour on Roseport hill (I’m afraid I don’t know the exact name). Isn’t that below minimum wage?
But alas, this is only late summer! What happens in our frigid ice and snow? Since drivers can’t chain up in Ontario how much do they get per hour when the inevitable spinout occurs? Can a driver start collecting EI immediately upon spinning or do they have to wait until the tow truck comes?
Assuming the MTO's primary concern is public safety is ignoring their track record, for example the awarding of LCV permits (Long Combination Vehicles). If safety was MTO’s primary concern, only trucking companies with excellent safety records would be awarded. But MTO awarded exclusive permits to companies who rated “satisfactory-unaudited” while hundreds of companies who rated “excellent” were flat out ignored. Logical people understand that MTO is all about political favoritism not safety. It’s the provincial Liberal version of the sponsorship scandal.
Safety was only one spin the MTO and OTA used to ram through bill 41. The other spin was the reduction of green house gases. If the OPP would enforce the speed limit the way all other provinces and states do, GHG savings would be generated from both trucks and four wheelers without any tradeoff with safety due to an increase in passing. Therefore any GHG savings from electronically limited trucks on the 400 series is a mute to duplicitous argument.
The real question is: what affect dose electronic limiters have on non 401 Series roads? Does GHG increase, decrease or stay the same?
Let’s look again at Hwy 17. According to my documented sources (all else being equal) it now takes about 45 liters MORE to travel from Thunder Bay to Ottawa than it did June 30 2009 and takes 15-25 minutes longer (in the summer). Trucks can no longer use momentum to carry them to the top of hills. Add to this cost: 4 wheelers trying to pass 35 MPH trucks in two way traffic, winter spinouts, or twisted drive shafts. All these situations costing MORE! It uses MORE fuel, emits MORE GHG and increases our dependence on fossil fuel. Sounds like a government solution to me! Anyone care for a cigarette?
Why would the MTO be interested in passing a law that has little to do with safety or GHG? The answer is simple, it’s because the OTA is interested! The speed limiters were birthed and written by the Ontario Trucking Association lobby group.
“…as for the amendments, we have none, and in fact I would go further and say that we would be very strongly opposed to any amendment. This is our bill. Every period, every comma, every semicolon was put there by us, and we would be very, very unhappy were it to be amended in any way…”
Lobby groups (same as unions) serve their members first. It’s not right or wrong it’s just how it’s done.
So why is the Ontario Trucking Association interested in increasing GHG, costs, risks and accidents? It surly isn’t to mandate their competition better fuel savings. I originally thought it was “…to legislate competition OUT of Ontario markets…”. Though this may have been on the minds of some OTA members I now believe the lion share of the reason is YOU! That’s right the Truck Driver!
Given the chance to drive 105KMH for 40 CPM verses 115KMH+ for 40 CPM, too many drivers were still choosing the 115KMH+. The OTA members, instead of possibly raising their pay rates, chose to restrict their competitions ability to attract YOU! That now means your speed and paycheck are limited (specifically in jurisdictions that have posted speed limits over 105 KMH). While other provinces and states are increasing speed limits Ontario mandates inter-jurisdictional limits. Just who do they think they are?
Let’s remember, individual OTA members hide behind the association, manipulating the industry human resource pools through legislation all the while “spinning” Bill 41 as a great environmental and safety initiative.
At the time of passing the MTO knew of the “spin” the OTA was making (otherwise they would have waited for Transport Canada’s studies and given a true forum to debate the issue). The reason they didn’t is because the Ontario Trucking Association politically owns Jim Bradley! Even though the liberal party was elected to represent the public, that assumption appears to be just another spin. As we can see, once elected, the office goes to the highest bidder. Vote out the liberals if you like, but that still doesn’t expose the bank rollers. The true puppeteers of this spin are the OTA members
It was the individual members of the OTA that voted to spin and misrepresent Bill 41 to the public. They hid behind an association but they are all equally complicit. Let’s remember, if they agree to spin in one area of business, to achieve their bottom line objectives, how safe do you feel working for them?
At the beginning of this article I wrote about a trucking company who “spun” $164 from an operators pay. Would you leave a company if they spun 164 of your dollars? Some would some wouldn’t. Would you leave a company if they spun 3200 of your dollars? Most would. The employer-employee relationship is based on trust. If they practice the art of “spinning” for $164 you can be assured they will enforce it for $3200. A smart driver will leave (or at least start looking) the minute they see the spin regardless of the amount or its impact on them personally.
Flawed logic is a form of deception, an action designed to distract someone from the glaring facts. This intellectual “slight of hand” is similar to strategic misdirection or “spin”. Call me old fashioned but to me a spin doctor is just a fancy word for professional liar. Imagine an occupation that pays people to lie and on a sliding scale, the better the liar the higher the pay.
There are many professions and industries that require “spin”. The most infamous work(ed) in the tobacco industry. They funded millions of dollars of “research” to “prove” that tobacco didn’t cause cancer. However, when the truth finally came out in court the industry coughed up BILLIONS.
The speed limiter debate is not without its own spin doctors. Let’s first look at the facts on how the law is administered. Let’s see where the liability or punishment is placed and what affect it has on the industry. On July 3rd I talked with a company driver who got a fine of $390.00 for driving a truck that is “non-compliant”. He asked his boss many times when he was going to “emasculate” it. The procrastinating employer kept saying “don’t worry” blah, blah, blah… He’ll pay the fine if there is one. Needless to say the driver had to keep working (wife-three kids-mortgage). Then he got checked. When he delivered the ticket, his boss still agreed to pay it (luckily) but he found out two things along the way: first the ticket goes on his personal abstract (apparently no demerits), second there was NO fine for the owner, it doesn’t even go on his CVOR scoring (MAYBE in the future but not now). It therefore appears the application of speed limiters is a simple punishment and tax on helpless drivers, not on non-compliant companies. The driver I mentioned had absolutely no physical or legal opportunity to comply. His only option was to refuse to work and therefore refuse to pay his mortgage and feed his wife and kids. In effect, this legislation places the ENFORCENENT of a law firstly on the pocketbook of the DRIVER yet ignoring the ones with authority.
Secondly let’s consider the evidence trail of how the speed limiter legislation was lobbied (spun). It was promoted as reducing both accidents and the industries carbon footprint (GHG). The argument originated from the OTA spin doctors who were successful in rejecting or ignoring all other evidence: University of Manitoba’s Barry E. Prentice’s excellent article June 2008, Transport Canada Studies released July 4th (not even three weeks after the vote), the notorious “public meeting” shame, and many others. The OTA’s spin is complete with its truth’s, half truths or maybe even full out lies. We shouldn’t be shocked at this. “Spinning” may well be a large part of David Bradley’s job description.
There are some truth’s mildly associated with the spin. The 400 series highways may well carry the majority of freight travel in Ontario. The 401 highway alone accommodates over 400,000 vehicles per day and is one of the busiest highways in the WORLD! One contributing factor of the volume is the speed the vehicles are allowed to travel. If the OPP actually enforced the speed limit the volume would decrease as congestion increased. Slowing down trucks and implying it doesn’t affect congestion should insult intelligent people. It is mathematically impossible!
The half truth about accidents is that speed kills. Of course speed kills, especially when its 80,000 lbs, but speed alone doesn’t kill, especially with heavy trucks. It’s the passing that creates the danger. Therefore, logically, the speed limiters actually INCREASE danger rather than decrease it (this logic was brought out by Mr. Prentice’s article but flat out ignored by the MTO). It was bad enough changing lanes going the same speed as the four wheelers, now try changing lanes going 15kmh slower than the 399,999 Mario Andretti’s. There is a direct correlation between the time of day traveling and the volume of urban fingers you get. But, if you are collecting fingers, there is more to consider than just time of day. The flat as a pancake 400 series thoroughfare does not represent the entire contour of Ontario. It has lower grades than Uncle Buck.
Traveling Hwy 17 has become a real crap shoot. Consider the hill near Roseport, which used to be climbed without gearing down (all-be-it approaching over speed limit). It must now be ascended in the basement (results slightly vary depending on gear configuration of course). A fully loaded tri-axle hitting the base of the hill at 112 KMH can stay in top gear right to the peak. However, just 7 KMH slower (combined with a delayed electronic kick in) has the driver pumping down gears till he’s crawling up at about 35 KMH (a perfect opportunity for collecting rural fingers). Since most drivers are paid by the mile the speed limiter reduces wages to about $8.64 per hour on Roseport hill (I’m afraid I don’t know the exact name). Isn’t that below minimum wage?
But alas, this is only late summer! What happens in our frigid ice and snow? Since drivers can’t chain up in Ontario how much do they get per hour when the inevitable spinout occurs? Can a driver start collecting EI immediately upon spinning or do they have to wait until the tow truck comes?
Assuming the MTO's primary concern is public safety is ignoring their track record, for example the awarding of LCV permits (Long Combination Vehicles). If safety was MTO’s primary concern, only trucking companies with excellent safety records would be awarded. But MTO awarded exclusive permits to companies who rated “satisfactory-unaudited” while hundreds of companies who rated “excellent” were flat out ignored. Logical people understand that MTO is all about political favoritism not safety. It’s the provincial Liberal version of the sponsorship scandal.
Safety was only one spin the MTO and OTA used to ram through bill 41. The other spin was the reduction of green house gases. If the OPP would enforce the speed limit the way all other provinces and states do, GHG savings would be generated from both trucks and four wheelers without any tradeoff with safety due to an increase in passing. Therefore any GHG savings from electronically limited trucks on the 400 series is a mute to duplicitous argument.
The real question is: what affect dose electronic limiters have on non 401 Series roads? Does GHG increase, decrease or stay the same?
Let’s look again at Hwy 17. According to my documented sources (all else being equal) it now takes about 45 liters MORE to travel from Thunder Bay to Ottawa than it did June 30 2009 and takes 15-25 minutes longer (in the summer). Trucks can no longer use momentum to carry them to the top of hills. Add to this cost: 4 wheelers trying to pass 35 MPH trucks in two way traffic, winter spinouts, or twisted drive shafts. All these situations costing MORE! It uses MORE fuel, emits MORE GHG and increases our dependence on fossil fuel. Sounds like a government solution to me! Anyone care for a cigarette?
Why would the MTO be interested in passing a law that has little to do with safety or GHG? The answer is simple, it’s because the OTA is interested! The speed limiters were birthed and written by the Ontario Trucking Association lobby group.
“…as for the amendments, we have none, and in fact I would go further and say that we would be very strongly opposed to any amendment. This is our bill. Every period, every comma, every semicolon was put there by us, and we would be very, very unhappy were it to be amended in any way…”
Lobby groups (same as unions) serve their members first. It’s not right or wrong it’s just how it’s done.
So why is the Ontario Trucking Association interested in increasing GHG, costs, risks and accidents? It surly isn’t to mandate their competition better fuel savings. I originally thought it was “…to legislate competition OUT of Ontario markets…”. Though this may have been on the minds of some OTA members I now believe the lion share of the reason is YOU! That’s right the Truck Driver!
Given the chance to drive 105KMH for 40 CPM verses 115KMH+ for 40 CPM, too many drivers were still choosing the 115KMH+. The OTA members, instead of possibly raising their pay rates, chose to restrict their competitions ability to attract YOU! That now means your speed and paycheck are limited (specifically in jurisdictions that have posted speed limits over 105 KMH). While other provinces and states are increasing speed limits Ontario mandates inter-jurisdictional limits. Just who do they think they are?
Let’s remember, individual OTA members hide behind the association, manipulating the industry human resource pools through legislation all the while “spinning” Bill 41 as a great environmental and safety initiative.
At the time of passing the MTO knew of the “spin” the OTA was making (otherwise they would have waited for Transport Canada’s studies and given a true forum to debate the issue). The reason they didn’t is because the Ontario Trucking Association politically owns Jim Bradley! Even though the liberal party was elected to represent the public, that assumption appears to be just another spin. As we can see, once elected, the office goes to the highest bidder. Vote out the liberals if you like, but that still doesn’t expose the bank rollers. The true puppeteers of this spin are the OTA members
It was the individual members of the OTA that voted to spin and misrepresent Bill 41 to the public. They hid behind an association but they are all equally complicit. Let’s remember, if they agree to spin in one area of business, to achieve their bottom line objectives, how safe do you feel working for them?
At the beginning of this article I wrote about a trucking company who “spun” $164 from an operators pay. Would you leave a company if they spun 164 of your dollars? Some would some wouldn’t. Would you leave a company if they spun 3200 of your dollars? Most would. The employer-employee relationship is based on trust. If they practice the art of “spinning” for $164 you can be assured they will enforce it for $3200. A smart driver will leave (or at least start looking) the minute they see the spin regardless of the amount or its impact on them personally.
Monday, July 27, 2009
From Subsistence Allowance to Speed Limiters
I'm switching gears somewhat as the implementation of Per-deum/subsistance allowance becomes more accepted (at least somewhat). As the first step of introduction to my second book, I'm entering another topic, "trucking companies". Specifically, I'll be drawing the line on the speed limiter debate. It is a very hot and passionate controversy. By no means is it over just because it was rammed through a vote.
Bill-41 is an example of how our democracy works. It was the brainchild of the Ontario Trucking Association. People elected to an office generally don't know much about an industry. Lobby groups present their case and (if it appears politicaly expedient to do so) bills are passed. Therefore the real power in Canada (at least at this time in our history) is lobby groups such as the OTA (made up of trucking companies).
Let's think logically about speed limiters for a moment. On the surface it appears a "no-brainer" enforce speed limits electronically rather than through the OPP. Anyone who opposes it appears to be a red-neck speeder bound to break all laws (a very unpopular poition). I don't think that position will be able to be reversed publicaly without sound leadership accompanied by clear arguments about the negative aspects of ESL's.
The negatives (just to name a few):
1. Limiting Inter-provincial trucks means OTA/MTO is governing other jurisdictions which have different speed limits.
2. This jurisdictional conflict may jeopardize NAFTA
3. May make roadways LESS safe (due to increased passing)
4. May actually increase fuel consumption since momentum for fuel management is significantly reduced.
If Canadian truckers don't band together against jurisdictional conflicts (such as these) they will continue to be needlessly regulated. I think it's about time that the trucker fights back.
Bill-41 is an example of how our democracy works. It was the brainchild of the Ontario Trucking Association. People elected to an office generally don't know much about an industry. Lobby groups present their case and (if it appears politicaly expedient to do so) bills are passed. Therefore the real power in Canada (at least at this time in our history) is lobby groups such as the OTA (made up of trucking companies).
Let's think logically about speed limiters for a moment. On the surface it appears a "no-brainer" enforce speed limits electronically rather than through the OPP. Anyone who opposes it appears to be a red-neck speeder bound to break all laws (a very unpopular poition). I don't think that position will be able to be reversed publicaly without sound leadership accompanied by clear arguments about the negative aspects of ESL's.
The negatives (just to name a few):
1. Limiting Inter-provincial trucks means OTA/MTO is governing other jurisdictions which have different speed limits.
2. This jurisdictional conflict may jeopardize NAFTA
3. May make roadways LESS safe (due to increased passing)
4. May actually increase fuel consumption since momentum for fuel management is significantly reduced.
If Canadian truckers don't band together against jurisdictional conflicts (such as these) they will continue to be needlessly regulated. I think it's about time that the trucker fights back.
Tuesday, June 9, 2009
Action Packed Future
For those who have never read the information on this sight before its best to view it from the beginning of November forward, it may save you thousands of dollars in taxes.
We will be rearranging this blog sight to accommodate another topic. Its an introduction to my second book. Until then any questions regarding Subsistence Allowance and its application can be read at this sight or you can contact me directly at Robert @thrconsulting.ca.
Stay tuned for additional action packed controvertial trucking industry research and analysis.
We will be rearranging this blog sight to accommodate another topic. Its an introduction to my second book. Until then any questions regarding Subsistence Allowance and its application can be read at this sight or you can contact me directly at Robert @thrconsulting.ca.
Stay tuned for additional action packed controvertial trucking industry research and analysis.
Tuesday, June 2, 2009
Another Canadian Tax Scandal
June 2009 will probably prove to be a major juncture in my battle with meal allowance, per-deum, subsistence allowance. Nothing what I’ve said in the past will change but I think a slight change in focus may be needed. In the last three years I have NEVER battled CRA regarding the application of meal allowance. However, I HAVE battled accountants and lease/owner operators.
The battle is never direct. Those who contact me directly have been very gracious and professional. However, there are too many accountants just not applying the rules correctly… or not even at ALL!. It’s disgraceful, and can only lead to disaster and confusion. It is in June 2009 I must make a choice for the betterment of the entire industry. Where do I concentrate my efforts? Immediately, right now, I’m concerned about the thousands of operators who are financially liable and don’t know it or refuse to believe it. It’s a tax scandal waiting to be exposed, but this time CRA is not the problem.
The battle is never direct. Those who contact me directly have been very gracious and professional. However, there are too many accountants just not applying the rules correctly… or not even at ALL!. It’s disgraceful, and can only lead to disaster and confusion. It is in June 2009 I must make a choice for the betterment of the entire industry. Where do I concentrate my efforts? Immediately, right now, I’m concerned about the thousands of operators who are financially liable and don’t know it or refuse to believe it. It’s a tax scandal waiting to be exposed, but this time CRA is not the problem.
Tuesday, May 26, 2009
Success is not always what it seems
Subsistence allowance/Per-deum continues to be a controversial topic among accountants, not CRA agents but accountants. They seem to continuously mumble about its application and their firms liability. Operators get half truths one month and reversals the next. If accountants don’t “get with it” operators bumping down the road will loose their faith in either the system, their current accountant or both.
When I first started publishing articles (after my book) I thought the lion share of education would be directed at the operators not the accountants. Oh well, it seems I’ll be tapping away at two industries simultaneously.
Last week we had another client go through an audit. It’s a standard thing for clients to be audited. The interesting thing about this one was that contrary to our communication to our client harsh and strong words were directed at the auditor. Apparently our clients thought it “prudent” to give the auditor a piece of their mind before the audit even began. This is not advisable under any situation since auditors have a great deal of autonomy and can make things much more difficult than they normally are. Though some accountants would like to mussel clients we have not gone that far… yet (just kidding).
The audit actually went exceptionally well even though the “foundation” started shaky. If fact our entire system got anther round of compliments, the employer-employee agreement all the way down to the personal vehicle log. It helped that the client was A rated and balanced down to zero regularly (monthly). All our other audits occurred with C or D rated.
Even so, I am still convinced that the application of subsistence nationally is dependant on a universal application of standards among accountants and operators. Two or three years from now, if Ottawa politics changes every subsistence allowance user may find themselves in the crosshairs if not universally applied.
I’m focused on making the system secure… which is sometimes a challenge when dealing with CRA.
When I first started publishing articles (after my book) I thought the lion share of education would be directed at the operators not the accountants. Oh well, it seems I’ll be tapping away at two industries simultaneously.
Last week we had another client go through an audit. It’s a standard thing for clients to be audited. The interesting thing about this one was that contrary to our communication to our client harsh and strong words were directed at the auditor. Apparently our clients thought it “prudent” to give the auditor a piece of their mind before the audit even began. This is not advisable under any situation since auditors have a great deal of autonomy and can make things much more difficult than they normally are. Though some accountants would like to mussel clients we have not gone that far… yet (just kidding).
The audit actually went exceptionally well even though the “foundation” started shaky. If fact our entire system got anther round of compliments, the employer-employee agreement all the way down to the personal vehicle log. It helped that the client was A rated and balanced down to zero regularly (monthly). All our other audits occurred with C or D rated.
Even so, I am still convinced that the application of subsistence nationally is dependant on a universal application of standards among accountants and operators. Two or three years from now, if Ottawa politics changes every subsistence allowance user may find themselves in the crosshairs if not universally applied.
I’m focused on making the system secure… which is sometimes a challenge when dealing with CRA.
Tuesday, May 12, 2009
That's my story.... one more time!
Two more court cases came into the media recently, both had to do with personal vehicle, log books, and company vehicles (in this example leases). I have been rather blunt regarding business use of personal vehicle or company vehicle used for personal use, even accused of being more rigorous than the average bean counter. These two situations may bring some clarity as to both my position and my “standards”.
The first was Jorgensen v. Canada, 2009 T.C.J. No. 20, T.C.C., Sheridan J., Jan 19/09. Digest No. 2846-025 (Approx. 7 pp.). A farmer had an extended cab diesel truck with no log books supplied. Other not so critical information was that the taxpayer traded in the lease as soon as the warranty expired or was about to expire. Additionally the “extended cab” was modified or converted to a “non-passenger”.
The judge (considering all the evidence) assessed that the truck was used all or substantially all for business purposes. Even though the taxpayers did not maintain a daily record of the trucks use, they maintained sufficient source records of their business activities to allow them to reconstruct a reasonable diary of the business use of the truck.
This, at face value, seems to contradict much of what I have been stating. However, let’s look at the second case.
The second is Martin v. Canada 2009 T.C.J. No. 2, T.C.C., Margeson J., Jan 05/09. Digest No. 2846-023 (Approx. 13 pp.). A corporation leased vehicle was provided to the wives of two shareholders. CRA assessed taxable benefits and standby charges for each participant. There were no log books supplied and the vehicles were licensed as personal use. The judge agreed with CRA in this case.
In my personal estimation 70%+ of personal vehicles that are used for business purposes (and are used as deductions) do not have log books. Too many accountants revert to the first case assuming they can “reconstruct” a defense after that fact. Many auditors don’t push the issue. The industry assumption becomes “no log book is defendable”. I still strongly disagree, especially in the trucking industry. The Jorgensen’s were farmers, which is a completely different industry than trucking. Driving to and from fields moving equipment and supplies is vastly different than using a “second vehicle” to transfer paperwork and supplies. Reconstructing a reasonable diary for a trucker (without a log) will be vastly different. It will be similar to the Martin case where vehicles are licensed as personal rather than farm use.
My position stands! No log book (for truckers using personal vehicle) no deduction. That’s my story and I’m sticking to it.
The first was Jorgensen v. Canada, 2009 T.C.J. No. 20, T.C.C., Sheridan J., Jan 19/09. Digest No. 2846-025 (Approx. 7 pp.). A farmer had an extended cab diesel truck with no log books supplied. Other not so critical information was that the taxpayer traded in the lease as soon as the warranty expired or was about to expire. Additionally the “extended cab” was modified or converted to a “non-passenger”.
The judge (considering all the evidence) assessed that the truck was used all or substantially all for business purposes. Even though the taxpayers did not maintain a daily record of the trucks use, they maintained sufficient source records of their business activities to allow them to reconstruct a reasonable diary of the business use of the truck.
This, at face value, seems to contradict much of what I have been stating. However, let’s look at the second case.
The second is Martin v. Canada 2009 T.C.J. No. 2, T.C.C., Margeson J., Jan 05/09. Digest No. 2846-023 (Approx. 13 pp.). A corporation leased vehicle was provided to the wives of two shareholders. CRA assessed taxable benefits and standby charges for each participant. There were no log books supplied and the vehicles were licensed as personal use. The judge agreed with CRA in this case.
In my personal estimation 70%+ of personal vehicles that are used for business purposes (and are used as deductions) do not have log books. Too many accountants revert to the first case assuming they can “reconstruct” a defense after that fact. Many auditors don’t push the issue. The industry assumption becomes “no log book is defendable”. I still strongly disagree, especially in the trucking industry. The Jorgensen’s were farmers, which is a completely different industry than trucking. Driving to and from fields moving equipment and supplies is vastly different than using a “second vehicle” to transfer paperwork and supplies. Reconstructing a reasonable diary for a trucker (without a log) will be vastly different. It will be similar to the Martin case where vehicles are licensed as personal rather than farm use.
My position stands! No log book (for truckers using personal vehicle) no deduction. That’s my story and I’m sticking to it.
Tuesday, May 5, 2009
Subsistence Allowance, a look to the future
OK! Long time no update. Congratulations to all those who won a copy of my book on CD. April was a very busy month for me. We have received a great deal of communication about subsistence allowance coast to coast. It seems many accountants are realizing the national implications.
This is what I predict will happen over the next several years (assuming no political changes in Ottawa). Independent accountants will apply subsistence allowance (per-deum) to clients (usually with a signed liability waver). Therefore operators will be left “vulnerable” to regional auditor interpretations.
Until CRA comes out with specific bulletins on the trucking industry applications the entire system will not be “confirmed” in the minds of many designated accountants. Since currently no firm is publicly willing to ensure the application (providing protection as we do) the entire industry is left without assurance (something CRA has on their side). One of the several reasons I believe they will NOT comment publicly for several years (if at all).
It’s a little like what happened when Don Wilkenson won that court case in August 2000. Within a couple months accountants all across Canada knew that the TL2 was not restricted to CRA guidelines, however, they were not informed of what number they CAN use… therefore to ensure returns accountants continued to restrict THEMSELVES to the guidelines. Uncertainty fosters conservative standards… or… if in doubt leave it out!
For those who want to know what needs to be done read my prior posts. It makes more sense when you start reading from November 1st 2008
This is what I predict will happen over the next several years (assuming no political changes in Ottawa). Independent accountants will apply subsistence allowance (per-deum) to clients (usually with a signed liability waver). Therefore operators will be left “vulnerable” to regional auditor interpretations.
Until CRA comes out with specific bulletins on the trucking industry applications the entire system will not be “confirmed” in the minds of many designated accountants. Since currently no firm is publicly willing to ensure the application (providing protection as we do) the entire industry is left without assurance (something CRA has on their side). One of the several reasons I believe they will NOT comment publicly for several years (if at all).
It’s a little like what happened when Don Wilkenson won that court case in August 2000. Within a couple months accountants all across Canada knew that the TL2 was not restricted to CRA guidelines, however, they were not informed of what number they CAN use… therefore to ensure returns accountants continued to restrict THEMSELVES to the guidelines. Uncertainty fosters conservative standards… or… if in doubt leave it out!
For those who want to know what needs to be done read my prior posts. It makes more sense when you start reading from November 1st 2008
Friday, April 24, 2009
Taxes and National Equality
The trucking industry (driver specific) has, at least in my opinion, never been so quiet. There seems to be a silent desperation going on. Those who are making money say nothing and those who are not are eaking it out. Options are slim. Saving every penny, including taxes, is on too many minds.
I stated in my prior blogs that when times are tough the crooks come out from the woodwork. The temptation amoungst drivers and operators is also there. I urge people great and small to weather the temptation. Stay true to integrity. Just because Canadians don’t like taxes dosen’t mean they can cheat on them. Let’s be clear Canadians don’t ike “over paying taxes” not “not paying taxes”. The key is organizing your finances and business to pay the LEAST amount of taxes.
Those who regularly read my blog know the best possible method of reducing taxes to the position of national equality. If you want to know the whole story read the 50 entries below. I guarantee you won’t be sorry.
I stated in my prior blogs that when times are tough the crooks come out from the woodwork. The temptation amoungst drivers and operators is also there. I urge people great and small to weather the temptation. Stay true to integrity. Just because Canadians don’t like taxes dosen’t mean they can cheat on them. Let’s be clear Canadians don’t ike “over paying taxes” not “not paying taxes”. The key is organizing your finances and business to pay the LEAST amount of taxes.
Those who regularly read my blog know the best possible method of reducing taxes to the position of national equality. If you want to know the whole story read the 50 entries below. I guarantee you won’t be sorry.
Tuesday, April 21, 2009
Who's responsibility is it anyway? The demise of the TL2!
In a perfect world where justice and equality prevails, everyone pulls their own weight, carries their own pail of responsibilities. There would be no government bailout of GM, Chrysler, Banks or Insurance companies. Sink or swim is the motto of business.
If in that world every industry carries their own there would be no need for the TL2. Why should the government reimburse citizens for industry related costs? And yet this is what is being done. Thirty years ago the trucking industry paid meal expenses on the road, but they abandoned that (or the responsibility taken from them) when the government started issuing a “rebate”.
In a perfect world a truckers wages would be separated from his job related costs. But we’re not in a perfect world.
If in that world every industry carries their own there would be no need for the TL2. Why should the government reimburse citizens for industry related costs? And yet this is what is being done. Thirty years ago the trucking industry paid meal expenses on the road, but they abandoned that (or the responsibility taken from them) when the government started issuing a “rebate”.
In a perfect world a truckers wages would be separated from his job related costs. But we’re not in a perfect world.
Thursday, April 16, 2009
Canadian Tax Savings...
All hail head colds, the stumper of all thoughts!
Saving taxes is a love for many. The extent to paying taxes boils down to one fact “fair share”. Canadians are not averse to paying taxes just so much as they believe they are not paying “too much”. Using the per-diem system ensures the Canadian truck operator they are in fact paying no more (and no less) than what is fair and reasonable. Check it out! If every lease/owner operator in Canada used the system they would save $100-200 million dollars in taxes.
E-mail me at Robert@thrconsulting.ca and you’ll enter to win my book on CD… FREE don’t even have to pay shipping and handling. Just read the entries and learn for yourself the real benefits.
Saving taxes is a love for many. The extent to paying taxes boils down to one fact “fair share”. Canadians are not averse to paying taxes just so much as they believe they are not paying “too much”. Using the per-diem system ensures the Canadian truck operator they are in fact paying no more (and no less) than what is fair and reasonable. Check it out! If every lease/owner operator in Canada used the system they would save $100-200 million dollars in taxes.
E-mail me at Robert@thrconsulting.ca and you’ll enter to win my book on CD… FREE don’t even have to pay shipping and handling. Just read the entries and learn for yourself the real benefits.
Tuesday, April 14, 2009
Audit trail one of the pillars of compliance
I watch CSI at times, piecing together evidence of an event. Blood trails, angles of entry, exit and deflection are all set together to tell a story. There is nothing that is left out. It shows motive, it shows intent and it shows what actually happened. Evidence usually dose not lie, things can sometimes be covered up but even the absence of evidence is evidence.
So it is with an audit trail. It is the paperwork that supports an agreement (employer-employee). It also reflects motive and intent, especially over an extended period of time. Where money goes reflects probably the clearest intent of it owner.
I once took a survey of leaders in a specific field. I was given the mandate to find out the priorities and intent of the field as a whole. I decided to ask only one question. “If I gave you $5000 dollars what would you do with it?” The results of my survey were an in-depth reflection of the entire field. It was very successful.
How an operator manages their cash in their corporation MUST reflect their employer-employee agreement, both its intent and its ultimate results. If all an accountant does is make journal entries to a shareholder loan account at the end of the year it is GROSELY inadequate. If the operator doesn’t want to conform to the requirements then the operator should not be able to benefit from compliance. NO COMPLIANCE… NO BENEFIT… (non-taxable that its!)
If an accountant doesn’t educate their clients to provide a reasonable audit trail, one that reflects the employer-employee agreement, I suggest the accountant find another industry to serve… maybe specialize in Chiropractors!
I know I’m harsh to accountants, but I believe that they are critical to the national implementation of subsistence/per-diem for the entire trucking industry. If they don’t get it right, the potential negative publicity of a failed appeal will delay tax savings to thousands of operators…
Don't forget to enter for this weeks free draw (see prior few entries for details). Last weeks winner has been notified and their CD's are on the way!
So it is with an audit trail. It is the paperwork that supports an agreement (employer-employee). It also reflects motive and intent, especially over an extended period of time. Where money goes reflects probably the clearest intent of it owner.
I once took a survey of leaders in a specific field. I was given the mandate to find out the priorities and intent of the field as a whole. I decided to ask only one question. “If I gave you $5000 dollars what would you do with it?” The results of my survey were an in-depth reflection of the entire field. It was very successful.
How an operator manages their cash in their corporation MUST reflect their employer-employee agreement, both its intent and its ultimate results. If all an accountant does is make journal entries to a shareholder loan account at the end of the year it is GROSELY inadequate. If the operator doesn’t want to conform to the requirements then the operator should not be able to benefit from compliance. NO COMPLIANCE… NO BENEFIT… (non-taxable that its!)
If an accountant doesn’t educate their clients to provide a reasonable audit trail, one that reflects the employer-employee agreement, I suggest the accountant find another industry to serve… maybe specialize in Chiropractors!
I know I’m harsh to accountants, but I believe that they are critical to the national implementation of subsistence/per-diem for the entire trucking industry. If they don’t get it right, the potential negative publicity of a failed appeal will delay tax savings to thousands of operators…
Don't forget to enter for this weeks free draw (see prior few entries for details). Last weeks winner has been notified and their CD's are on the way!
Thursday, April 9, 2009
Political Will continued...
The publicity around per-diem (subsistence/meal allowance) is not an income tax issue! It is a political issue, guided by political will! Let me take the long road, with a few stops along the way, to explain what I mean.
CRA has many, many levels of authority. The higher up someone advances the more politics are involved in their job descriptions. In order to advance as high as the upper crust “generals” (as I described them in my book) civil servants need to make sure they don’t get blamed for ANYTHING! “Cover your butt” is the first course taken by civil servants when contemplating advancement. This means that any new application of the income tax act must be able to be flexible enough to weather shifts in political parties. Sometimes new administrations direct CRA in different directions.
Here is the latest example of “upper level” income tax legislation designed to be applied through political will rather than clear legislation! The article is called “Lawyers see overkill hidden in federal bill” it is found at http://www.thebottomlinenews.ca/index.php?section=issue
The article can be summarized as follows. Current changes to the Competition Act and the Investment Canada Act hidden in our government’s budget implementation bill is legislation that is aimed at those who “fix prices” through cartel style agreements. It “…changes the conspiracy law to make it illegal to conspire with a competitor, without proof of the impact on competition…”, “…there will be no test… any agreement will be a violation…”. Another significant change comes with the label “abuse of dominance” (anti-bullying policy). As the article states “…caution is the keyword as it will be hard for many companies to know, in advance, when they have abused their dominant position… it is difficult to distinguish between aggressiveness and abusiveness…”
In this legislation there is deliberate vagueness. It produces an INVISIBLE glass ceiling, imposing “law” without clarification or definitions yet with record setting fines and penalties. So we must be realistic in the application of the law, ultimately it will come down to “political will”. Who will complain? Who will listen? Who will send out the dogs (no pun intended). Owners of monopolies, oligopolies etc would view the legislation as forcing a “blank check” to be written to the government… with no clear invoice!
Legislation like this may be designed to intimidate and control without specifics. It is a reflection of how the higher level CRA officials view their jobs and positions. Legislation must have administrative flexibility, no definite right/wrong, no clarity just authority.
The only way to affect long term stability in the application of some income tax issues (such as subsistence/per diem) is political will. Most “exceptions” must be individually defended until they become common knowledge with universal application. Once enough people use the exception it would create a negative public perception if it suddenly was taken away.
The more people know about it, the more people who use it the safer it is for everyone. Political will, in a democracy is always the citizens. Think about the implication of long term application and stability of any tax benefit!
Keep sending your e-mail's to win the CD version of my book (see prior entries)
CRA has many, many levels of authority. The higher up someone advances the more politics are involved in their job descriptions. In order to advance as high as the upper crust “generals” (as I described them in my book) civil servants need to make sure they don’t get blamed for ANYTHING! “Cover your butt” is the first course taken by civil servants when contemplating advancement. This means that any new application of the income tax act must be able to be flexible enough to weather shifts in political parties. Sometimes new administrations direct CRA in different directions.
Here is the latest example of “upper level” income tax legislation designed to be applied through political will rather than clear legislation! The article is called “Lawyers see overkill hidden in federal bill” it is found at http://www.thebottomlinenews.ca/index.php?section=issue
The article can be summarized as follows. Current changes to the Competition Act and the Investment Canada Act hidden in our government’s budget implementation bill is legislation that is aimed at those who “fix prices” through cartel style agreements. It “…changes the conspiracy law to make it illegal to conspire with a competitor, without proof of the impact on competition…”, “…there will be no test… any agreement will be a violation…”. Another significant change comes with the label “abuse of dominance” (anti-bullying policy). As the article states “…caution is the keyword as it will be hard for many companies to know, in advance, when they have abused their dominant position… it is difficult to distinguish between aggressiveness and abusiveness…”
In this legislation there is deliberate vagueness. It produces an INVISIBLE glass ceiling, imposing “law” without clarification or definitions yet with record setting fines and penalties. So we must be realistic in the application of the law, ultimately it will come down to “political will”. Who will complain? Who will listen? Who will send out the dogs (no pun intended). Owners of monopolies, oligopolies etc would view the legislation as forcing a “blank check” to be written to the government… with no clear invoice!
Legislation like this may be designed to intimidate and control without specifics. It is a reflection of how the higher level CRA officials view their jobs and positions. Legislation must have administrative flexibility, no definite right/wrong, no clarity just authority.
The only way to affect long term stability in the application of some income tax issues (such as subsistence/per diem) is political will. Most “exceptions” must be individually defended until they become common knowledge with universal application. Once enough people use the exception it would create a negative public perception if it suddenly was taken away.
The more people know about it, the more people who use it the safer it is for everyone. Political will, in a democracy is always the citizens. Think about the implication of long term application and stability of any tax benefit!
Keep sending your e-mail's to win the CD version of my book (see prior entries)
Tuesday, April 7, 2009
Ethical application of the Income Tax Act
I’ve been in discussion with some very interesting people in the last several months. Privately accountants nod their head in acknowledgement and slap my back in support of the effort I’ve displayed in applying ethics to the income tax act. However, as several have asked “…what does the income tax act have to do with ethics?...”. It is a very interesting topic, especially amongst accountants. Placed as bluntly as that, reactions usually vary from philosophical interest to “deer in the headlights”. Applying ethics to the Charter of Rights and Freedoms is a given. The Federal Accountabilities Act is a shoe-in for an ethics discussion, but the income tax act? The longer a person’s been in the profession the more it appears wasted effort. It’s wasted because the act is so complex and produces such conflicting results, not the atmosphere that fosters feelings of security, justice and equality all results of solid ethics.
I read a couple articles lately that show examples of this. There was an article in “The Bottom Line” http://www.thebottomlinenews.ca/index.php?section=issue page 19 by writer Vern Krishna titled “Law consistent in its inconsistencies”. Without going through details (which are pretty amazing as well as complex) it discusses the outcome of a court case similar to the one I described on December 19, 2008 Singleton vs Canada. Without me drawing to much attention to a different case I’d just like to quote the writer’s final statement of the supreme courts decision “… Westminster prevails over GAAR, except in the circumstances where GAAR prevails over Westminster…”. It was a clear example of the “super complexity” and circular reasoning/results within the income tax act.
There have been many people who have stated that accountants refuse to publicly fight for their “clients”. They too often assume “all accountants just work for the government anyway”! These are the people who believe that the income tax act is a “black and white law”. They believe it is clear what is allowed and clear what is NOT ALLOWED! Thinking they know the white they accuse accountants of painting things black. This may be a serious misrepresentation of the industry… note the vague terms.
The income tax act has over two thousand pages that are added to it every year. For every concrete rule there are several (if not many) concrete… or vague exceptions. The more complex a deduction, generally, the more clarity is lost to various interpretations, as in the English spelling Rule: I before the E… except after c… or in seize… height… either… foreign… It becomes so weird that you can choke on the exceptions and be forced to use the Heimlich maneuver.
Accountants generally like systems and predictable rules. The economy generally likes systems and predictable rules. The income tax act is not friendly to either unless accountants refuse to navigate the plate of spaghetti exceptions. Some accountants assume one primary rule: the fewer exceptions used the more assurance there is of compliance. Better to err on CRA’s favor than to risk explaining your string of exceptions.
GIVEN THIS… the application of per-diem to the trucking industry can be too much of an “exception” to too many accountants even though it is based on sound ethics and applications historically allowed within the income tax act.
If CRA can twist a very flexible act into a contradictory tool of discrimination rather than a guideline, ethics means NOTHING! The bottom line would be… don’t stand in the way of the judge, jury and executioner. Stay quiet!
Who is going to pay an accountant to defend this income tax application? Both an honest and reasonable question! Few, if any, individual operators will pay to have their accountant go before the Supreme Court. Few, if any, individual accountant will pay their own way to go before the Supreme Court.
So why do I write what I write? Why not just apply it and be happy to grow my firm?
I need time to explain my reasoning. Let me give you a hint. It has to do with political will!
See you on Thursday!
Don't forget to e-mail your name for a free CD version of my book. See prior days for details!
I read a couple articles lately that show examples of this. There was an article in “The Bottom Line” http://www.thebottomlinenews.ca/index.php?section=issue page 19 by writer Vern Krishna titled “Law consistent in its inconsistencies”. Without going through details (which are pretty amazing as well as complex) it discusses the outcome of a court case similar to the one I described on December 19, 2008 Singleton vs Canada. Without me drawing to much attention to a different case I’d just like to quote the writer’s final statement of the supreme courts decision “… Westminster prevails over GAAR, except in the circumstances where GAAR prevails over Westminster…”. It was a clear example of the “super complexity” and circular reasoning/results within the income tax act.
There have been many people who have stated that accountants refuse to publicly fight for their “clients”. They too often assume “all accountants just work for the government anyway”! These are the people who believe that the income tax act is a “black and white law”. They believe it is clear what is allowed and clear what is NOT ALLOWED! Thinking they know the white they accuse accountants of painting things black. This may be a serious misrepresentation of the industry… note the vague terms.
The income tax act has over two thousand pages that are added to it every year. For every concrete rule there are several (if not many) concrete… or vague exceptions. The more complex a deduction, generally, the more clarity is lost to various interpretations, as in the English spelling Rule: I before the E… except after c… or in seize… height… either… foreign… It becomes so weird that you can choke on the exceptions and be forced to use the Heimlich maneuver.
Accountants generally like systems and predictable rules. The economy generally likes systems and predictable rules. The income tax act is not friendly to either unless accountants refuse to navigate the plate of spaghetti exceptions. Some accountants assume one primary rule: the fewer exceptions used the more assurance there is of compliance. Better to err on CRA’s favor than to risk explaining your string of exceptions.
GIVEN THIS… the application of per-diem to the trucking industry can be too much of an “exception” to too many accountants even though it is based on sound ethics and applications historically allowed within the income tax act.
If CRA can twist a very flexible act into a contradictory tool of discrimination rather than a guideline, ethics means NOTHING! The bottom line would be… don’t stand in the way of the judge, jury and executioner. Stay quiet!
Who is going to pay an accountant to defend this income tax application? Both an honest and reasonable question! Few, if any, individual operators will pay to have their accountant go before the Supreme Court. Few, if any, individual accountant will pay their own way to go before the Supreme Court.
So why do I write what I write? Why not just apply it and be happy to grow my firm?
I need time to explain my reasoning. Let me give you a hint. It has to do with political will!
See you on Thursday!
Don't forget to e-mail your name for a free CD version of my book. See prior days for details!
Thursday, April 2, 2009
FREE CD Book giveaway draw every Saturday. One (or more) per week for the month of April. Find out how by reading this page!
For some, spring break develops pictures of beaches and university students partying all night. For me it’s a reduced work load at the office so I can spend half days with my kids. Tuesday I watched the Lord of the Rings trilogy with my son. I can’t tell you how many times my feet fell asleep.
The half days are filled with immediate correspondence and critical things (basically a week of partial procrastination). I’m working on developing a more in-depth relationship with my readers. This is one reason I am giving away one copy of my book on CD per week (in a draw) to anyone who e-mails me stating they read each of my entries since November 1st 2008 (honor system). If you want to be included in the draw just e-mail me at Robert@thrconsulting.ca. I promise I won’t sell your e-mail address to anyone. If there are too many participants I will increase the amount of CD’s given away per week to make it easier to win (at my discretion).
The publicity of per diem subsistence allowance is slowly building. There are accountants all across Canada reviewing data, informing drivers and making career choices. Working with accountants is like herding cats. Each has a mind of their own (which, long term, is actually a good thing).
Truck drivers are becoming more and more attuned to the options available to them. It’s a slow process but the information supply chain is starting to work smoother.
The half days are filled with immediate correspondence and critical things (basically a week of partial procrastination). I’m working on developing a more in-depth relationship with my readers. This is one reason I am giving away one copy of my book on CD per week (in a draw) to anyone who e-mails me stating they read each of my entries since November 1st 2008 (honor system). If you want to be included in the draw just e-mail me at Robert@thrconsulting.ca. I promise I won’t sell your e-mail address to anyone. If there are too many participants I will increase the amount of CD’s given away per week to make it easier to win (at my discretion).
The publicity of per diem subsistence allowance is slowly building. There are accountants all across Canada reviewing data, informing drivers and making career choices. Working with accountants is like herding cats. Each has a mind of their own (which, long term, is actually a good thing).
Truck drivers are becoming more and more attuned to the options available to them. It’s a slow process but the information supply chain is starting to work smoother.
Tuesday, March 31, 2009
DRAW FOR FREE CD VERSION OF MY BOOK... one winner every Saturday for the month of April!
I'm reminded of Lord Randolf Churchill (the father of Sir Winston Churchill). He was in line to be a probable candidate for the Prime Minister of England, and would have had he not contracted sypholis... anyway! Before his afliction he was as swift minded as his son was to be. After inumerable quotes that garnished him a reputation for intellectual greatness he finally said "...and the constant necessity of trying to say something new makes one a drivelling idiot..." (The Last Lion/ Visions of GloryLittle, Brown and company, Author: Manchester page 203, ).
If you scroll through the history of short articles you will have more knowledge about saving taxes for a lease/owner operator than 80-90% of all designated accountants serving operators coast to coast. It dosn't matter if they belong to a "fellowship" or even have direct access to the Finance Minister! You have the eductiona to save more tax cash than they do.
This site gets 450-650 hits per day! It has had over 15,000 hits per month since inception. I chart both the number of hits as well as how many pages are viewed. Today I'm going to suggest over viewing the history, starting with the very first post (November 1st). This blog is designed as an educational and entertainment source for CanadaTruck Operators. It's designed to expose one of the most horendous incremental tax assaults in Canadian history. It is also designed to perfectly cure the anguish that assault has caused. Go ahead educate yourself! If you e-mail me that you read it all I will place your name in a draw for a free copy of my book on CD. I will draw one winner every Saturday for the entire month of April 2009.
If you scroll through the history of short articles you will have more knowledge about saving taxes for a lease/owner operator than 80-90% of all designated accountants serving operators coast to coast. It dosn't matter if they belong to a "fellowship" or even have direct access to the Finance Minister! You have the eductiona to save more tax cash than they do.
This site gets 450-650 hits per day! It has had over 15,000 hits per month since inception. I chart both the number of hits as well as how many pages are viewed. Today I'm going to suggest over viewing the history, starting with the very first post (November 1st). This blog is designed as an educational and entertainment source for CanadaTruck Operators. It's designed to expose one of the most horendous incremental tax assaults in Canadian history. It is also designed to perfectly cure the anguish that assault has caused. Go ahead educate yourself! If you e-mail me that you read it all I will place your name in a draw for a free copy of my book on CD. I will draw one winner every Saturday for the entire month of April 2009.
Thursday, March 26, 2009
Don't get detoured on the road to tax savings
On the issue of incorporation many operators ask very similar questions. One question that keeps coming up is having your corporation own a vehicle so the entire costs can be written off. It is a question that comes about because when the average individual thinks about corporations they picture big money operations such the trucking companies they work for. They see trucking companies have “corporate vehicles” and they often are allowed to drive around “free”. They then assum they can do the same thing if their corporation purchases one. The truth is, they can but at a cost.
CRA does not want “company vehicles” driving around as total write offs. Automobile dealerships (for example) regularly used to provide dealer plates to their salesman. One of the reasons why they do a lot less of it is because of “taxable benefits”. Taxable benefits are the exact opposite of non-taxable benefits (on that point my logic is impenetrable). Estimated re-imbursement for job related costs are classified as “non-taxable” the exact opposite of receiving the benefit of a “company vehicle” for personal use.
If a company owns a vehicle and the employee uses it as a personal vehicle, CRA calculates the percentage of personal use and assigns a taxable benefit to the use (a generous rate by the way). However, even if the vehicle is NEVER used but is parked on the driveway of the employee, the opportunity for personal use still exists, and is therefore taxed. The specific name of this opportunity is called “standby charges”. To place a long complicated formula into a simply number it would be 30% of the purchase value. This means that a $20,000 vehicle that is NEVER used but parked just once on the employees driveway is deemed to be $6000 of taxable benefit… indefinitely! If the vehicle is kept and owned by the corporation for 10 years the charge will be $6000 EVERY YEAR! It does not reduce in value as does depreciation.
This application of tax is BRUTAL on company owned vehicles. It is so horrendous that operators who are incorporated should NEVER have their corporations own a small vehicle. Using their personal vehicle for business use, and having the corporations pay them “non-taxable benefits” by using the treasury board re-embursement figures is the BEST after tax system available to ANY Canadian citizen. Check out your province rates at: http://www.tbs-sct.gc.ca/pubs_pol/hrpubs/tbm_113/b-eng.asp.
Saving bucks is often times a matter of using the right system!
CRA does not want “company vehicles” driving around as total write offs. Automobile dealerships (for example) regularly used to provide dealer plates to their salesman. One of the reasons why they do a lot less of it is because of “taxable benefits”. Taxable benefits are the exact opposite of non-taxable benefits (on that point my logic is impenetrable). Estimated re-imbursement for job related costs are classified as “non-taxable” the exact opposite of receiving the benefit of a “company vehicle” for personal use.
If a company owns a vehicle and the employee uses it as a personal vehicle, CRA calculates the percentage of personal use and assigns a taxable benefit to the use (a generous rate by the way). However, even if the vehicle is NEVER used but is parked on the driveway of the employee, the opportunity for personal use still exists, and is therefore taxed. The specific name of this opportunity is called “standby charges”. To place a long complicated formula into a simply number it would be 30% of the purchase value. This means that a $20,000 vehicle that is NEVER used but parked just once on the employees driveway is deemed to be $6000 of taxable benefit… indefinitely! If the vehicle is kept and owned by the corporation for 10 years the charge will be $6000 EVERY YEAR! It does not reduce in value as does depreciation.
This application of tax is BRUTAL on company owned vehicles. It is so horrendous that operators who are incorporated should NEVER have their corporations own a small vehicle. Using their personal vehicle for business use, and having the corporations pay them “non-taxable benefits” by using the treasury board re-embursement figures is the BEST after tax system available to ANY Canadian citizen. Check out your province rates at: http://www.tbs-sct.gc.ca/pubs_pol/hrpubs/tbm_113/b-eng.asp.
Saving bucks is often times a matter of using the right system!
Tuesday, March 24, 2009
Human Resourse: supply, demand, taxes and labor laws
I have had the pleasure of talking with perhaps hundreds of drivers coast to coast. Sometimes it affords me information about certain geographical areas that experience certain trends where other areas do not.
As a small example (if you please). I spoke with a recruiter a little over two years ago (pre Oil boom of Alberta) and they informed me that the rate of pay for their lease/owner operators based in the West was four cents per mile MORE than the rates for Ontario based operators. It confused me slightly because at the time it tended to be more expensive to live in Ontario than in the West. The reason was… supply and demand! There were more operators available in Ontario than there was in the West, therefore they didn’t need to pay as much.
This supply and demand example reflects more than just “rate of pay”. Another more drastic example I have heard and seen out of Ontario is the tendency for trucking companies only to hire/contract drivers who own their own corporations. It’s a “driver services company/corporation”. A single driver wanting to work for a company is pressured into incorporating, and the corporation would be paid by the mile. The benefits to the trucking company are numerous: no labor board hassles, payroll taxes, short or even long term obligations, damage claims… on and on. This tendency allows some trucking companies to do an end run around numerous labor restrictions while legitimate companies are forced to operate legally. It’s a corner cutting that MUST stop.
Of course when everyone is looking for work, desperate people end up doing desperate things. Giving up employee rights should not be tolerated. It’s not good, but it probably won’t stop until demand picks up above supply.
In tough economic times scoundrels run rampant. Watch yourself.
As a small example (if you please). I spoke with a recruiter a little over two years ago (pre Oil boom of Alberta) and they informed me that the rate of pay for their lease/owner operators based in the West was four cents per mile MORE than the rates for Ontario based operators. It confused me slightly because at the time it tended to be more expensive to live in Ontario than in the West. The reason was… supply and demand! There were more operators available in Ontario than there was in the West, therefore they didn’t need to pay as much.
This supply and demand example reflects more than just “rate of pay”. Another more drastic example I have heard and seen out of Ontario is the tendency for trucking companies only to hire/contract drivers who own their own corporations. It’s a “driver services company/corporation”. A single driver wanting to work for a company is pressured into incorporating, and the corporation would be paid by the mile. The benefits to the trucking company are numerous: no labor board hassles, payroll taxes, short or even long term obligations, damage claims… on and on. This tendency allows some trucking companies to do an end run around numerous labor restrictions while legitimate companies are forced to operate legally. It’s a corner cutting that MUST stop.
Of course when everyone is looking for work, desperate people end up doing desperate things. Giving up employee rights should not be tolerated. It’s not good, but it probably won’t stop until demand picks up above supply.
In tough economic times scoundrels run rampant. Watch yourself.
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