As cross-border truck drivers are being told to use the ArriveCAN app to comply with COVID-19 protocol requirements, many in the trucking industry have been asking CTA about also the tax treatment of cell phone and plans for employees, owner-operators and PSBs. CTA has received the following response from CRA:
A self-employed individual can generally deduct an amount as a business expense if it is made for the purpose of gaining or producing income from a business, it is not on account of capital, it is not a personal expense, and it is reasonable in the circumstances. As indicated in the Self employed Business, Professional, Commission, Farming, and Fishing Income Guide for Line 9790 or 9270 – Other Expenses, under the heading,
“Computer and other equipment leasing costs
If you lease computers, cellular telephones, fax machines, and other equipment, you can deduct the percentage of the lease costs that reasonably relates to earning your business income. You can also deduct the percentage of air-time expenses for a cellular telephone that reasonably relates to earning your self-employment income.
If you buy a computer, cellular telephone, fax machine, or other such equipment, you cannot deduct the cost. You can deduct CCA and interest you paid on money you borrowed to buy this equipment that reasonably relates to earning your business income. For more information on CCA, see Chapter 4.”
Generally, an employee may be able to deduct certain expenses paid for employment if they had to pay for the expenses under their contract of employment and they obtain a completed and signed Form T2200, Declaration of Conditions of Employment, from their employer. In particular, an employee may be able to deduct a part of a basic cell phone service plan if certain conditions are met. For a list of these conditions, see Chapter 3 of the Employment Expense T4044 Guide under the heading Computers, cell phones, and other equipment.
Personal Services Business
Deductions in computing income for a personal services business are restricted to the following:
- salary, wages or other remuneration of the incorporated employee
- cost of other benefits or allowances provided to the incorporated employee
- certain expenses of the corporation associated with selling property or negotiating contracts
- legal expenses paid in the year by the corporation in collecting amounts owed for services rendered
Information on deductible expenses for a personal services business can be found at chapter 4 of the T2 Corporation – Income Tax Guide under the heading Personal Services Business.
In recognition of the ArriveCAN policy, CTA has created a training package that will help drivers and their companies understand how to utilize the ArriveCAN App and ensure their border crossing experience remains as seamless as possible. Click here for more.