The Canadian Trucking Alliance (CTA) expressed ‘cautious optimism’ over clarifying statements from Canada’s National Revenue Minister, Diane Lebouthillier, regarding the Driver Inc. tax scheme and ESDC’s proactive approach to enforcement for tax and labour violations.
“Historically, ESDC’s enforcement approach to all matters under their jurisdiction has been reactionary and has tended to rely on complaints being filed against companies,” said Jonathan Blackham, CTA’s director, Policy. “With the introduction of ESDC’s new Administrative Monetary Penalty Regime (AMPs) and other compliance tools coming into force, we expect a more proactive and targeted approach to enforcement, with specific emphasis on Driver Inc.
“CTA applauds ESDC for this targeted enforcement,” added Blackham.
The 2018 federal budget included a provision targeting Driver Inc. with former Labour Minister, Patty Hajdu, who at that time said the government’s “intent is to create a level playing field.”
Since then, CTA has confirmed that infractions related to this new provision in the Canada Labour Code will be included as an offence in the AMPs regime, meaning that Driver Inc. carriers will receive monetary penalties for noncompliance and will be publicly listed for these violations. These developments are expected to unfold toward late spring/summer.
“This commences the kind of federal enforcement needed to eliminate this labour and tax scam from our sector,” said CTA president Stephen Laskowski. “CTA and its member associations will continue to work with provincial workers’ compensation boards and all relevant federal departments regarding the need to ramp up enforcement against Driver Inc.”
Meanwhile, developments on the tax side of the battle continue to unfold with the federal Minister declaring the requirement of T4As in the trucking sector.
“We are heartened to see Minister Lebouthiller begin the first necessary steps to curtail the ongoing tax evasion and other illegal deductions associated with the practice of Driver Inc,” said Laskowski. “With this development combined with the recent ESDC announcement around targeted enforcement, we are hopeful the Driver Inc. compliance puzzle is closer to being solved.”
In a letter to CTA earlier this year, Minister Lebouthillier confirmed that T4As are mandatory for Driver Inc. drivers (also known as ‘incorporated drivers’ or personal services businesses). The Minister went on to state that “all amounts paid to a personal services business must be reported on a T4A slip. This confirms that all amounts paid by one business (e.g. a carrier) to another business (e.g. and incorporated employee/ Driver Inc. driver) for services rendered (including driving) must be reported on a T4A. Failure to do so would mean a violation of tax laws and associated penalties. Drivers and carriers should consult their tax advisors to learn about the consequences of participating in Driver Inc.
The Minister reaffirmed that ignorance is no defence for noncompliance and both payers and workers are subject to penalties.
“If a worker or payer is not sure of the worker’s employment status, either party can request a ruling to have the status evaluated,” said the Minister. “All payers and workers are responsible for knowing their tax obligations and may face penalties and interest if they do not meet these obligations.”
The Minister’s letter offers a clear warning to Driver Inc. companies and drivers participating in the scheme, said Laskowski. “Clearly, the Government of Canada is aware of the situation and the time for compliance is now.”
In other related news, CRA issued a memo this week entitled “Are you incorporated but perform the duties of an employee? Know your tax obligations.” Click here to read the memo: Canada Revenue Agency_public
CTA is also reminding carriers to participate in awareness campaign against Driver Inc. To learn more, click here.