As many a kid will attest, how old you are can change depending on the situation.

My brother used to lament the fact that when our parents needed him to do something responsible it was because he was “almost 13” but when there was something they didn’t want him to do it was because he was “only 12.”

When it comes to taxes and licensing, light-duty trucks fall into a similar grey area. Are they commercial vehicles that need to follow the rules that big rigs do? Or are they just like any other F-350 running up and down the highway?

Well, it depends on the situation.

Do IFTA and IRP regulations apply to Light-Duty Trucks

Lately I’ve had a number of inquiries from guys using commercial-grade pickups in hotshot and other specialized services. They’re running freight all over Western Canada in light-duty trucks and want to know if IFTA and IRP apply to them.

Well, a two-axle pickup truck with a trailer is definitely below the 11,797-kg weight threshold for IFTA compliance, so no worries there.

This setup is also under the 11,794-kg weight threshold for IRP but the program allows you to license lighter-weight vehicles by choice.

Should you do it?

What’s IRP?

The International Registration Plan is an agreement among 10 Canadian jurisdictions and 48 states (plus Washington, D.C.) that allows you to license a vehicle to operate in those jurisdictions for one fee paid to your home jurisdiction. On your behalf, your base jurisdiction collects and pays out what you owe to all the other IRP member jurisdictions based on your percentage of travel.

Medium and heavy-duty trucks that operate in two or more IRP-member jurisdictions must register under IRP.

While you may not be required to register your trailer-hauling dually, it may be worth it. That’s because IRP is also used to administer other taxes like provincial sales tax, ad valorem tax, and third structure tax.

Paying PST 

Paying prorated vehicle tax through IRP is a potential advantage compared to paying tax conventionally, especially if you travel in Manitoba, Saskatchewan, or British Columbia. Each of these provinces collects PST on the depreciated value of vehicles and equipment (“goods”) that come into the province for “temporary use.” Saskatchewan charges 5% PST on out-of-province vehicles that operate there for one or more days in a 12-month period. B.C. charges 7% PST after five days of use. Manitoba’s temporary use formula has no minimum time and is simply based on the number of days the vehicle is in the province.

Instead of fussing around with temporary-use provisions, you can use IRP to apportion and pay sales tax on your light-duty truck, saving yourself the accounting work and potential exposure of non-compliance.

Big Savings?

The benefits can be substantial.

Say you buy a pickup truck for $50,000 and a trailer for $15,000 and plan to run regularly in B.C., Saskatchewan, and Manitoba. Under the temporary use formula you could pay as much as $4,300 per year in PST.

Under IRP, you’d pay roughly $500 for your plate—including sales tax—and be licensed to run virtually anywhere in North America without a trip permit. Licensing under IRP and paying prorate vehicle tax also exempts you from paying PST on your trailer as well as any parts and repairs.

If there is a downside, it’s that if you have to keep distance records by jurisdiction. However, you have to keep those records for insurance purposes anyway. A GPS device installed in your vehicle can take that pain away and produce the distance-by-jurisdiction reports you need.

If you think you can fly under the “weight threshold” radar and avoid paying sales tax on a light-duty vehicle, think again. Should the sales tax collectors catch up to you, be prepared to cut a heavy-duty cheque (check).

Finally, don’t confuse IRP and IFTA weight thresholds with National Safety Code weight thresholds for logbooks, safety, and maintenance. Once you run a mile outside your home jurisdiction, you’re a federal carrier and fall under those rules for vehicles registered for 4,501 kg and greater. You may be a hotshot, but you’re a commercial vehicle operator just like the big kids.

Conclusion

A lot of this can seem hard to navigate.  So many boxes to check and steps to take.  We want to help.

Please take a moment to take a look at our Free Fleet Tax Compliance Toolkit.

This tool kit is made up of these invaluable resources and tools:

  • Fleet Tax Compliance Guide (7 Critical things you need to know about Fleet Tax Compliance)
  • [VIDEO] IFTA Fuel Tax 101
  • Driver Trip Report (Excel Spreadsheet Template)
  • How To Use the Driver Trip Report
  • GPS Reporting & Checklist

If you have any questions regarding IFTA regulations or protocol, please reach out to us, we are here to help.  Call us today or drop us a line via email.  Here is our contact information:

Call us Toll Free: 1-877-860-8025
Email: sjohnson@fleettaxpro.com


About the Author:
Sandy Johnson is the founder and managing partner at North Star Fleet Solutions in Calgary. The company provides vehicle tax and license compliance services for trucking operations ranging from single vehicles to large fleets. She can be reached at 877-860-8025 or northstarfleet.com.