Not many people know about IFTA, but with a closer look one sees not only the benefits of this program, but how actively seeking out programs and technologies benefits your business.
Let’s start with IFTA. What is it?
Doing business in today’s connected world means crossing borders. While that opens up opportunities, it also creates a lot of paperwork among different tax jurisdictions. For companies whose fleets regularly cross the border, a program called the International Fuel Tax Agreement (IFTA) helps to simplify the process. Business in Edmonton magazine reached out to the Government of Alberta to learn more.
“The International Fuel Tax Agreement was introduced on July 1, 1993 in an effort to simplify the regulatory burden for carriers travelling in different Canadian and American jurisdictions,” says a representative on behalf of the Government of Canada. “IFTA is an agreement among American and Canadian jurisdictions that enables uniform collection and distribution of fuel taxes paid by motor carriers traveling in multiple jurisdictions. IFTA membership is voluntary and allows the carrier to significantly reduce the paperwork and compliance burden for fuel tax reporting.”
It was further pointed out that, “Carriers that generally only travel in Alberta are not required to register for IFTA as all of their fuel is purchased and consumed in Alberta. Inter-jurisdictional carriers may obtain single trip permits in jurisdictions outside of Alberta instead of registering for IFTA.”
The Government of Alberta cites IFTA’s advantages and encourages interested parties to learn more at www.alberta.ca/international-fuel-tax-agreement.aspx:
- A carrier licensed under IFTA is required to submit only one quarterly fuel tax return to its base jurisdiction, where it is registered.
- The single return covers the distance traveled in all IFTA jurisdictions, rather than the carrier being required to complete separate fuel tax returns for each jurisdiction.
- Each base jurisdiction then refunds or collects the net fuel tax for all member jurisdictions
How does IFTA work on a more practical level and who is it best suited for? For those answers, we turned to Coreina Hubert, BBA.
Hubert has 15 years of tax accountant experience and eight of those years were in the public sector with Grant Thornton LLP and MNP LLP. Now she is the owner/operator of Book-it Bookkeeping Inc. and has been implementing new technology into small businesses since 2009 to help companies focus on time-saving techniques and connect with others that can help with business growth.
“The IFTA tax program is designed for the larger companies who are operating trucks with over 50,000 kilometres a day,” says Hubert. “When speaking to one of my clients who is an independent long-haul driver about the IFTA program this is what he said, ‘Being an independent long-haul driver I only drive average 1,000 km a day, [so for me] this program isn’t worth it. We have to log the total kilometres driven on gravel roads or pavement, and idle time for each day, and be precise. If the paper work isn’t right the government will just throw out your submission and that is it. It is really meant for the larger companies who operate all their trucks with over 50,000 kilometres a day. Sometimes as an independent contractor, we do submit our details to the company we contract with. In return they give us 35 per cent of that return back, but those big companies have the cash to pay for the lawyers to get those documents to the government properly. We don’t.’”
However, Hubert notes, “Even though this program may not be suited for all company sizes, you can seek the services of a qualified accountant who would have knowledge of programs suitable for your business and how to help you apply for them.”
IFTA is not the only program out there that small business owners should know about. Hubert says that she personally leverages the federal and provincial programs applicable to her small business and encourages entrepreneurs to look at the different options available. “For a business to succeed in today’s world they have to be smarter and quicker than their competitors. Every minute wasted is a minute that can be used to grow your business.”
Whether that program is IFTA or something else that can help ease the paperwork or ongoing tasks of the business, Hubert says to check it out. To help entrepreneurs do this, her company has created a program called CorePro8, which helps business owners save time and money while creating more efficient interactions between the company and its accountant.
“We created CorePro8 in 2018 to help new owners with the critical parts of starting up a business, gain exposure to the new timesaving technology, and gain resources for business growth and income. Most new business owners are on the fly to get their business started up now, which is great – but not so great when they are missing critical components that cost them later down the road. As an accountant I have seen the direct results of technology being used by business owners. New business owners can now incorporate at anytime of the day and get guidance on how to properly set up with the use of CorePro8. Six years ago, if you wanted to incorporate you needed to see a lawyer or accountant during business hours. Who has time to do this when you have crazy work shifts?
“CorePro8 is available in French and English and can be used by any Canadian. What CorePro8 offers is the ability to become incorporated/self employed at anytime while also providing the proper tools to address important questions, like ‘should I be registered for sales tax, how do I pay myself, and what can I deduct as a business expense?’ Additional features include being able to find funding through Government of Alberta and federal programs.”
She’s also a fan of Hubdoc, an app being used in the business industry since 2011 and recently acquired by the accounting software giant, Xero. “All the receipts you have bundled up between your doors in the car or at home, what a pain those are to get to the accountant! With Hubdoc the business owner can take a picture of the receipt and it is stored online where the accountant can see it and book it in. There are so many new things out there to help business owners be much more competitive in their industry!”
So, let’s return to IFTA. It’s a program that many don’t know about, but for the right company, it can be very beneficial. Beyond IFTA we are reminded that there are many private and public programs, software, apps and services that business owners can leverage to help their companies grow. Whether IFTA is a program that works for you, or your company is better suited to another program, service, or technology, don’t rest on your laurels when it comes to gaining efficiency and saving time and money. Look around, see what’s out there, and leverage the tools at your disposal.