The Truckers' Voice

Meal Expenses of Truck Drivers

In general, the Canadian tax system limits the deductibility of business-related meal and entertainment expenses to 50 per cent of the amount otherwise allowable as a deductible expense. This limitation reflects the personal consumption aspect inherent in such expenses.

Budget 2007 proposes to increase, over five years, to 80 per cent the deductible portion of the cost of food and beverages consumed by long-haul truck drivers during eligible periods of travel. This measure will also apply to employers that pay, or reimburse, such costs incurred by long-haul truck drivers that they employ.

For this purpose a long-haul truck driver will be:

an employee whose principal duty of employment is to drive long-haul trucks for the purpose of transporting goods; and
an individual whose principal business is to drive long-haul trucks for the purpose of transporting goods.

A long-haul truck will be a truck or tractor that is designed for hauling freight, that is primarily used for that purpose to earn income and that has a gross vehicle weight rating (as that term is defined in subsection 2(1) of the Motor Vehicle Safety Regulations ) in excess of 11,788 kg.

An eligible period of travel during which the higher deductibility percentage will apply in respect of a long-haul truck driver is a period during which:

the driver is away for at least 24 continuous hours from:

in the case of a self-employed individual, the municipality where the driver resides (the residential location), or
in the case of an employee, the municipality or metropolitan area in which the business to which the employee reports is located (the business location); and

the driver’s trip is for the purpose of transporting goods to, or from, a location beyond a radius of at least 160 kilometres from the residential or business location, as the case may be.

The deductible portion of expenses will be increased to 60 per cent for expenses incurred on or after March 19, 2007 and before January 1, 2008, and to 65, 70 and 75 per cent for such expenditures incurred during 2008, 2009 and 2010, respectively. The deductible portion will be increased to 80 per cent for such expenditures incurred after 2010.

Currently, under the goods and services tax/harmonized sales tax (GST/HST), a person entitled to claim input tax credits (ITCs) for food and beverage expenses for a reporting period in a fiscal year is required to make a year-end adjustment to their net tax to recapture ITCs that are attributable to the personal consumption portion of the expenses. To parallel the change in deductibility of long-haul truck driver meal expenses under the Income Tax Act , the proportion of recaptured ITCs related to these expenses will decrease from 50 to 20 per cent between 2007 and 2011 for an allowance or reimbursement paid, or tax that became payable, or is paid without having become payable, in respect of the supply of the food and beverages for the periods during which the increased deductibility percentage is phased in for income tax purposes.