The proof of the pudding is in the eating.

That’s how it is with the Full Reciprocity Plan, a new way to manage fleets under the International Registration Plan.

Nearly 20 years in the making, FRP grants full reciprocity to all apportioned vehicles in all IRP-member jurisdictions and eliminates any provisions related to estimated distance.

FRP took effect on Jan. 1. Now, three months in, we’re seeing that despite all the forethought and work that went into cooking up this new program, there’s still room to improve the recipe.

New Fleets

FRP for new fleets is pretty straightforward.

When a fleet is “new,” or it accumulated no actual distance during the previous IRP distance-reporting period (July 1 to June 30), the registration fees are calculated using the base jurisdiction’s “average per-vehicle distance” chart. That’s the new name for the old “estimated distance” chart.

Each jurisdiction has determined an average per-vehicle distance by taking the total of all the vehicles it licensed under IRP and dividing that number by the total number of vehicles licensed in that jurisdiction. This is what new fleets should use to calculate their fees.

No more estimating. No more guesswork. A piece of cake.

Renewals

For carriers that are renewing their fleets under IRP, registration fees are based on actual mileage in the jurisdictions the fleet traveled to during the reporting period (from July 1 to June 30 of the preceding year).

Again, pretty straightforward.

But what happens when a company moves to a different jurisdiction? Is it now a “new” fleet in Jurisdiction #2 or an existing fleet that should use distance accumulated when it was based in Jurisdiction #1?

What if a company shifts only part of its fleet to Jurisdiction #2? What distance does it use then?

The new rules don’t account for these situations but they’re nonetheless real. With no track record to go on, it’s hard to say how jurisdictions will interpret these and other unforeseen scenarios under FRP. If history is any indication, we’ll see differences in interpretation that are as far apart as the span of the Grand Canyon. 

What to Do

No one should take “it depends” as an answer. It can lead to some fuzzy math and serious audit exposure.

As always, understanding the principals of apportionment is the key to success under IRP, so ask for help. Here are some of the questions I’m getting about FRP:

Q: Why are all these jurisdictions on my cab card? We don’t even go there. 

When you register a fleet now, your base jurisdiction will issue a cab card that lists all IRP member jurisdictions. With every jurisdiction on the cab card, your apportioned vehicles are approved to travel in any IRP jurisdiction during the license year, which means you’ll have the flexibility to go to travel to member states and provinces at any time without permits.

Q: Can I change my base jurisdiction? 

It’d be great if you could set up shop in a jurisdiction that interprets the rules the way you need them. Most carriers don’t have a choice because of the IRP definition of “established place of business.”


If you’re establishing a new IRP fleet and do have a choice, you may be able to save some money by making the right one.

I have a client who needed to set up a fleet to run in Alberta, British Columbia, and Saskatchewan. She had some flexibility in where to base her trucks.

Should she go with Alberta, B.C., or Saskatchewan?

In order to calculate registration fees, you need a GVW, a purchase price in Canadian dollars (also converted to U.S. dollars), and a model year. The purchase price and model year are used to calculate sales tax and the weight is used to calculate the license fee portion. 

For illustrative purposes, I picked some average numbers in terms of weight (39,500 kg or 80,000 lbs) and purchase price (2015 model-year trucks at $150,000 or $187,500 US). Given her fleet’s travel pattern, it would cost $3,122.65 per truck in Alberta; $3,869.84 in B.C.; and $3,897.14 in Saskatchewan. Quite a difference.

Remember, this is for a new fleet. At renewal time, my client’s fees may increase or decrease depending on the actual distance travelled from July 1 to June 30.

Q: What are you talking about? What’s FRP?

If you have yet to renew your fleet in 2015 because your registrations are still valid, the old rules apply through your expiration date. Until then, check with your base jurisdiction and the IRP web site for general information about FRP and talk to a tax and license pro about how FRP will affect you and your fleet.


To learn more about FRP, including what it will mean for new fleets, please get in touch with us. We can help.

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.