Canadian trucking has a tax dodging problem

A group representing Canadian truckers is sounding the alarm about a scam it thinks has reached a “crisis level.” And unlike a novelty mudflap, it’s no laughing matter.

Driving the news: The Canadian Trucking Alliance (CTA) is asking the CRA to step up its surveillance of a tax scheme referred to in the trucking industry as “Driver Inc.” where companies have employees register themselves as contractors selling their services. 

  • Unlike real independent owner-operators, these truckers don’t own or operate anything. They still drive one company’s vehicle, making them de facto employees.

  • But since the company pays a corporation and not an individual under this scheme, payments are free from the usual tax deductions that come with paycheques. 

Why it matters: Per the CTA, companies and truckers collectively avoid paying $1 billion in taxes annually through illegal Driver Inc. schemes. Last year, the federal government said it would invest $26.3 million to crack down on the practice. 

  • Some truckers willingly partake in the scheme, but companies have also been found to target vulnerable workers, like recent immigrants or temporary foreign workers. 

Zoom out: There’s nothing wrong with contract work (millions of Canadians do it) but misclassifying workers to dodge taxes and labour laws is a problem that’s not limited to trucking. In recent years, everyone from carpenters to pizza delivery drivers have spoken up against the practice.—QH