{"id":3403,"date":"2022-07-21T18:20:10","date_gmt":"2022-07-21T18:20:10","guid":{"rendered":"https:\/\/cantruck.ca\/cra-announces-new-initiative-aimed-at-psbs-and-driver-inc\/"},"modified":"2025-01-10T16:43:09","modified_gmt":"2025-01-10T16:43:09","slug":"cra-announces-new-initiative-aimed-at-psbs-and-driver-inc","status":"publish","type":"post","link":"https:\/\/cantruck.ca\/fr\/cra-announces-new-initiative-aimed-at-psbs-and-driver-inc\/","title":{"rendered":"CRA Announces New Initiative Aimed at PSBs and Driver Inc."},"content":{"rendered":"

The Canada Revenue Agency (CRA) recently released a\u00a0bulletin<\/a>\u00a0outlining efforts to increase oversight on Personal Services Businesses (PSBs) \u2013 a technical tax term for what many in the trucking industry believe is used as cover for companies who are engaged in the illicit practices as part of the Driver Inc. scheme.<\/p>\n

At its core, the Driver Inc. is a tax evasion practice whereby truck drivers, who would normally be considered employees, are purposefully misclassified \u2013 either by choice, force, or manipulation \u2013 as independent contractors or PSBs through the company they work for. This allows the carrier to avoid paying payroll taxes such as the employer portion for Employment Insurance (EI) while also allowing them to pocket the savings when it comes to paying drivers overtime, vacation pay, paid sick days, etc. It is also often used to shed Workers\u2019 Compensation costs (premiums) which are paid by the employer to cover lost wages for workers who are injured on the job like falling at a workplace or an accident on the road.<\/p>\n

In its PSB\u00a0bulletin<\/a>, CRA outlines tax implications for PSBs and provides examples of Driver Inc.-type arrangements. In addition to releasing these educational materials, the CRA has also announced a targeted enforcement pilot against misclassified PSBs in certain sectors like trucking: PSB Pilot July 21 2022_public<\/a><\/p>\n

Details on a new campaign focusing on PSBs, includes an educational outreach project to help industries that hire PSBs understand and comply with the different tax obligations associated with their conditions of work.CRA officials will also be contacting Canadian businesses as part of this project and asking them to provide documentation on the nature of their payer\/payee relationship.\u00a0The outreach will inform both payers and payees of their tax obligations to enable them to\u00a0make informed decisions on their working relationship.<\/p>\n

\u201cAll businesses and workers are required to comply with their applicable tax obligations and are not permitted to simply pick and choose which taxes they want to pay, if any at all. CTA expects\u00a0that the full extent of the law is applied\u00a0to those revealed through this pilot to be in gross violation of the Tax Act,\u201d says CTA president Stephen Laskowski. \u201cCTA\u2019s Board position is clear on Driver Inc violations \u2013 the time for government education on Driver Inc-related tax evasion is over; it\u2019s time for those offenders to feel the full force of the law. This pilot must mark the beginning of that hard enforcement by CRA.\u201d<\/p>\n

ESDC has also been conducting an\u00a0enforcement pilot<\/a>\u00a0in Ontario on Driver Inc for several months. In recent communications to CTA, ESDC confirmed that substantial noncompliance has been found through the pilot, with many companies now facing enforcement action.\u00a0The communication also confirms that the Ontario Driver Inc. enforcement pilot will now become a national program.<\/p>\n

Both ESDC\u2019s and CRA\u2019s enforcement actions are also in addition to the targeted enforcement the Ontario WSIB has been conducting for several years. Many of these trucking companies have already\u00a0received corrective adjustments<\/a>\u00a0from the WSIB, totalling millions of dollars, with some individual companies receiving levies of upwards of $800,000.<\/p>\n

Below are additional resources to help companies and drivers educate themselves on their obligations and the options available to them.<\/p>\n

Resources for Drivers and Carriers<\/u><\/strong><\/p>\n