Who Makes More Money? Driver or Operator?

A super highly contested topic such as the earning differences between a Driver or Operator is eventually on the mind of every driver in trucking. Usually, within a year or two of being a company driver, comparisons begin to formulate in their minds.

Canada Revenue Agency does separate Drivers from Operators (self-employed) officially, but their records do state that there is little to no significant difference. In my research for my 2015 book “Making Your Miles Count: Choosing a Trucking Company”, I also found no statistically significant difference between the two categories unless one or two features were present. The first is, does the Operator have their truck paid for? It didn’t make any difference whether the data was from 1996 or 2012, the results remained the same. There is no significant taxable income differential until the major asset (truck) is paid for. Once paid for, either the lease payments were not there to reduce income or the depreciation on the vehicle was minimal due to the time/cost reduction in expenses. However, once the truck was paid for, the income dramatically increased by $20-30K on average. The return on investment of a paid for truck is the first REAL value in the operator industry. Very few notable exceptions are available.

The Second feature that changes the earnings difference between Company Drivers and Operators is in the application of non-taxable benefits (NTB) to the taxable income. Using NTB produces an approximate 75% reduction in income tax ($16,000 down to $4000) or $12,000-$12,500 annually.

So, if everything else remains the same, an Operator has $12,000 higher AFTER TAX CASH FLOW than does a Company Driver. It has nothing to do with equipment or driving ability, it is simply an added tax advantage provided to an Operator. That’s the good news!

The bad news is that less than 3% of all Operators in Canada use NTB. If you are reading this and you submitted a TL2 Simplified Form to your accountant or provided him the “days on the road in Canada and the days on the road in the USA”, you are NOT using NTB. The Canadian tax laws do not allow you to use both the TL2 simplified form/figure and the Non-Taxable Benefit figures at the same time. That’s called double dipping. Well over 96% of all Operators in Canada are asked by their tax preparers to use the TL2 simplified method to complete their returns.

In 2007 when my first book was published it presented the entire argument AGAINST using the TL2 in favor of the Non-Taxable Benefit system. It’s amazing that after 18 years, accountants across Canada still do not know about it, or do not care to save their clients the taxes. I’m sorry for being this harsh but after 18 years I’ve now assumed accountants will NEVER use it unless an Operator demands it.

Accountants refuse to invest time, effort, and research into the system because (quite frankly) to a tax preparer the Independent Operator Industry is low paying freight. The industry isn’t worth ‘investing time & effort into’. So, they simply do what they have always done… the TL2 simplified method.

Making Your Miles Count has kept track of our collective savings and as of March 2024, it just passed $71 million dollars in tax savings for Operators.

The system does have serious disadvantages (especially to tax preparers); it is more detailed work monthly and requires a level of defence to CRA that is specific to the system itself. Linking the ELD’s with NTB is just the beginning. Collecting ITC’s from NTB will also be a required defence. The list of details is quite lengthy for the tax preparer but HIGHLY beneficial to the Operator.

It is my opinion, to adequately service the Independent Operator industry, technological innovation is an absolute necessity. Making Your Miles Count has invested in specific technology now for well over 5 years and it has simplified a very complex system into something the average operator (and tax preparer) can easily use and comply with. MYMC guarantees the filing of NTB to $50K, something no other firm does. To me… it’s a no-brainer.

These are just a couple issues important to Independent Operator’s success. Our MYMC PODCAST produces a wide range of different topics for the industry to consider. My team and I have a booth (2287) at the Truck World 2024 event in Toronto April 18-20th. Come on down, let’s talk for a while. Contact us and we can get you into the show with a free pass.

If you can’t make it, please still reach out, I’d love to talk to you about creating after-tax wealth in your life and career.

About the Author:
Robert D. Scheper is a leading Accountant and Consultant exclusively serving the Lease/Owner operator industry in Canada. His first book in the Making Your Miles Count series “taxes, taxes, taxes” was released in 2007. His second book “Choosing a Trucking company” is the most in-depth analysis of the independent operator industry today. He has a Master’s degree (MBA) in financial management and has been serving the industry since he and his wife came off the road in 1993. His dedication, commitment and strong opinions can be read and heard in many articles and seminars.

You can find him at www.makingyourmilescount.com or 1-877-987-9787.