Overview of how Subcontracting works in Trucking
If you have an extra tractor that is just sitting there, you may want to consider finding a driver that you can subcontract some work to. Subcontracting a driver is a way to earn extra revenue from additional trucks and equipment you have, or you may choose to subcontract to another driver that has their own truck. Subcontracting is different than hiring an employee, in that you are entering into a contract with the driver where they agree to do part of the work that was in the original arrangement between the signer of a previous contract.
The big thing to know in Freight Transportation Services in Canada is whether service is zero-rated for GST/HST or not. A freight Transportation service must be supplying the transportation service. This is different from a driving service, where a driver does not assume responsibility for supplying the freight transportation service. A driving service (subcontractor) must charge GST.
How to Invoice as Trucking Subcontractors in the Canadian Transportation Industry
If you are driving for a trucking company in Canada as a subcontractor, you will have to add GST to your bills to the trucking company. Here in Alberta, that would mean invoicing your receipt subtotal as usual and adding the GST charge to the billable hours or amounts.
As the payee charging GST (the subcontractor), you will need to keep tabs of GST balances and remit that GST (less ITCs) to the CRA according to your scheduled GST remittances. This means totaling all documented billable income that a subcontracted driver has earned from sales in commerce, including accounts receivable, and remitting it in the form of GST remittances to the CRA.
Bookkeeping plays a huge roll in keeping track of GST owed. When each deductible expense purchase is documented and accounted for in the form of receipts, the GST account is debited and goes against the credited GST that was invoiced by you as income. As expert bookkeepers, we check GST against each transaction to make sure you as a subcontracted driver are not overpaying GST. The debited GST that is charged for a subs expenses are called ITCs, which is an acronym for Input Tax Credits. A Sales Tax Agency Report is built from the total of the income and expenses, and the process of remittance begins.
Conclusion
GST remittances are NetFiled electronically and must be done usually at end of the month after the end of the GST period. You can remit GST Here on the Canada Website. The GST must be reported on an itemized report and submitted. Once GST is remitted, the subcontractor will receive confirmation from the CRA. As a part of our accounting service, we provide our clients with a copy of the CRA confirmation as proof that GST has been remitted.
Are you a subcontracted driver that needs accounting services? We can help you stay on top of your GST remittances to avoid late fees and penalties, GST audits, and large GST balances owed. Contact us today for all your accounting needs.
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