I work as a Contract Welding Inspector in Fort McMurray. I am incorporated and the only employee. I maintain a permanent residence in Calgary. I'm paid by the hour with weekly deposits into my business bank account. Typically I work 21 days in - 7 days out. Added to my invoiced (time sheet is what they prefer), amount is GST.
1: However the deposit also includes a $200/per day worked living allowance. Given the cost of living here in Fort Mac particularly & given the uncertainty of ones contract in terms of length of time...makes it difficult to obtain temp lodging in a suite or condo. As such many of us use hotels and end up with monthly rates. It ain't cheap up here by any means.
So my question is this: Are these monies for LOA taxable.?
2nd part of my question is this: Part of my pay includes pay for my truck (which has my company logo prominently displayed on it), which is in my company name. I also have been given a fuel card for use while in Fort Mac. I do however, travel back to Calgary once a month with this vehicle. How will CRA look at this aspect of my business.?
I am going to take it a given that the LOA is a taxable benefit..no different than a moving allowance. I do pay collect remittable GSt on that money..so am not going to dick around with whatever little amount is left over after paying food/lodging costs.
So as I understand it you invoice for $200 a day. Now the question is how do you get that money. The $200 invoice is money into your company's pocket. The way I'm doing it is my company pays me a tax free allowance based on gov't rates for a gov't employee away from home in private accommodation. My company pays directly for my room in Calgary. My principle res is in BC.
I have talked to people at work, lots are on contract and this is my first one, and they pay the sup to themselves tax free. I was talking to one who was getting $150 day to live in Calgary but didn't think it was enough so was paying himself $200. He said he had been audited and CRA had no problem with that though his accountant had issues.
Travel back and forth is a business expense. If you were a straight employee you would be paid mileage to get to the jobsite. I have leased a truck and really all I do is commute in it back and forth to Calgary from BC. It sits in Calgary Monday - Friday. I bill company lease payments ( comes directly for Company account as company is leaser) and bill company any expenses , through a expense claim, like gas , insurance, registration maintenance.
On moving expense. I have got moving allowances and they never show up on T4s. When you do a moving expense tax deduction there is a spot to deduct whatever you got from employer from what your expenses were. I have been moved by the gov't and they were more generous that what I could have claimed on my taxes. That was not treated as a taxable benifit.
The difference here is the company I am subcontracting to is paying the LOA or sup...to me...I then use that for my hotel costs and meals/entertainment (A glass of cab sauv nightly for medicinal purposes of course )
Interesting...yet lets say for a week my actual salary is 2000 (for poops n giggles). I also get say 1400 in LOA for a grand total of 3400 for the week. I am also paid 170.00 GSt for a grand total of 3570. As such when it comes time...and I'm not even sure that as a contrator I will get a T4, will that monies for LOA show up.??
You can look at it several ways. If you were an employee and paid a sup , would that payment end up on your T4? I would say no. I was paid a sup as an employee of $60/day ( they paid for apartment, vehicle, transport ( airfare to middle east)) and that payment was tax free. They told me up front that it was tax free. I made money on deal as my cost of food was actaully cheaper than in Canada.
And what is a sup? They could have you put in a claim for actual pay on hotel and meals ( or pay you a per diem on meals) but they don't want the hassle of handling all those claims and every one would spend right up to the max any way. With a sup they probably pay less overall and have less paper work. As you are not an employee they will not send you a T4 so any payments they send you are tax free.
Spoke to a guy in the office who haas more experince , he has run a company and has paid people direct or to their company. No T4 when direct. Now he is on other side and get it through company and company pays on expenses , apartment etc. As long as the amount of the Sup is in line with waht reasonable expenses would be then it should be tax free no issue.
Fair enough ski...only thing that has me a bit confused is why the company I Sub Contract to is paying GST on both my earnings and LOA.?.. Not that it really matters but..come year end it could be an issue right.?
What do I claim as income then if I paid GST on Earnings+LOA. Both or just Earnings.? There will be a discrepency and CRA (from experience), does not like nor takes a light hearted approach to discrepencies.
......aahh, but I see you said "direct" as in an envelpe with cash.. ok, then I could see the LOA not being counted on a T4. In my case then I am going to assume they will in fact take that as earnings as well - OK, no worries..I have all the receipts.
Should end up being a wash in the end on this gig anyway.
That is interesting. But when I used to fill out expense reports the company I worked for always wanted the GST to be seperate. That way they tracked the GST they were paying. So they are paying you a LOA of $200 plus GST. Almost all expenses would have GST.
If you were a gov't employee then they don't care about tracking GST when they give a LOA as they don't have to track it.
However, you cannot claim these expenses (meals,hotels etc) as a business expense.
This I don't see. If a large company has an employee that they send to a remote location away from his/her home they pay all expenses, actaul /per diem or combo of both ( receipt for hotel & and allowance for meals). So why can't a small company do this? I work of a company where a good % are on contract especially the construction guys who almost all have a resifence in Edmonton , company in Calgary. They get paid a LOA or sup to live in Calgary paid to thier company and then pay themselves the LOA or claim actuals if they want to spend more than sup. Its very comman pracitice here.
Let me clarify, I was in a similar situation and this was what I was advised by my accountant at the time. The company can either pass the LOA onto the employee and claim the entire amount or it can keep the LOA from the initial contractor, claim the expenses (meals, hotels, fuel etc) and pay corporate tax on the remainder. What cannot happen is that the company claims the expenses and the LOA.(you would be surprised how many think they can do this) Bear in mind, tax rules may vary by province and this was almost ten years ago. I suggest asking your accountant or perhaps other forum members with better knowledge of our tax system can chime in. I apologize for the lack of clarity in my first reply. Sometimes the fingers don't type what the mind is thinking. One would have to determine whether the cost of living and accommodation are greater than the amount of LOA. Obviously the person receiving the LOA must be an employee of the company as mentioned by the OP