It is very clear that employers are responsible for deducting Canada Pension Plan (CPP) contributions, EI premiums, and income tax from remuneration or other amounts they pay to their employees as well as assuming responsibility for other statutory responsibilities including vacation pay, statutory holiday pay and provincial health premiums. Employers must remit these deductions along with their share of CPP contributions and EI premiums to the Canada Revenue Agency (CRA).

However, a new business model has emerged in our industry that is being used by a rapidly growing segment of the industry that is not paying their fair share. Known as ‘Driver Inc’, a number of drivers and carriers are now entering into agreements whereby drivers will incorporate themselves and will then sell their driving services to the carrier. What distinguishes this from independent contractors (known as owner-operators in our sector) is these drivers do not own, lease or operate a vehicle. They drive the carrier’s vehicles and have no financial investment in their business and are virtually indistinguishable from a regular employee in every significant way. Governments need to be aware of this growing problem, because in most cases, those involved – both companies and drivers – are knowingly avoiding many of their tax responsibilities, including paying the appropriate source deductions (CPP, EI, etc.) and are taking advantage of small business tax advantages not otherwise available to them.

This severely impairs the majority of law-abiding compliant carriers, especially the legitimate owner-operators and small businesses that are the backbone of our industry.

While both CRA and ESDC have issued clarifications against this practice, they lack the resources to enforce the rules fairly across Canada. It’s time for Ottawa legislators and policy makers to take action and restore compliance and fairness in our economy by increasing fines for participants of Driver Inc while supporting CRA and ESDC with the tools required to properly enforce the rules across the country.

If action isn’t taken soon, we fear this could become the most prevalent employment model in our and other industries, denying the government billions in leaked revenues lost to the underground economy.

• For more information on Driver Inc. and the tax implications, view this CRA guidance memo.
• For more information on the employee labour implications of Driver Inc, view this ESDC memo to CTA.