Closing in on Tax Evaders in Canada’s Trucking Industry

business and investment planning. Magnifying glass with business report on financial advisor desk. Concept of data analysis, accounting,audit, business research.
business and investment planning. Magnifying glass with business report on financial advisor desk. Concept of data analysis, accounting,audit, business research.

The Driver Inc. model is a driver pay system where individual drivers are paid as contractors instead of employees.  Under this model, significant money is saved in tax payments since these contractors often only pay business tax and are exempt from mandatory contributions to government programs like the Canada Pension Plan (CPP).

It is easy to see why businesses may be attracted to the Driver Inc. model.  The problem with the model, though, is that it is often illegal, with participants and trucking companies not paying taxes they should be paying and drivers not receiving full employment benefits.

The Canadian Trucking Alliance has long been opposed to the Driver Inc. model due to the unfair business advantage it gives to illegal operators and to the potential driver abuses that can result.  Many trucking companies are opposed to the model as well for these same reasons.

Driver contractors may be able to operate as contractors like other personal service businesses.  However, there are personal tax implications and additional business-related costs these individuals often don’t consider while the carrier they operate for makes the system seem like a win-win for both of them.  Individual drivers and carriers alike face considerable penalties from the government if they are discovered and audited.

Trucking is an industry characterised by owner-operator programs which range, in terms of independence, from truly-independent owner-operator truck drivers to lease agreements which are hard to distinguish from the Driver Inc. model.  Truck drivers and companies are advised to consult legal and accounting advice to make sure their pay structures aren’t bringing additional risk into their operations.