CTA now wants crackdown on ‘Driver Inc.’ payments, not back then.

 

The Canadian Trucking Alliance (CTA) continues to sound the alarm about Driver Inc. – a payment model in which drivers who do not own or operate their own vehicle still become incorporated and receive pay without source deductions.

Not all that long ago, a decade or so, trucking carriers were demanding to keep not just owner operators at arms length, they wanted to keep drivers at arms length to get around the regulations about paid holidays, pensions and other benefits the carriers didn’t want to pay.   The carriers wouldn’t even have to issue T-4s.  Now they created a situation that’s now not working in their favour and they want to change it.  

The payment scheme has become so widespread that all carriers may need to consider adopting the approach if they want to compete for drivers, the alliance says, calling on the federal government and provincial compensation boards to intervene.

“Contract drivers who are utilizing company vehicles, without any financial risk/responsibility to own/operate the vehicle,  contravenes the historical definition of driver-contractor status in our sector,” said Stephen Laskowski, CTA president. “To now rule against this historic principle, effectively changing the definition, would turn our industry upside down.”

The alliance has been looking to the Canada Revenue Agency to clarify its position on the payment approach – something it estimates is costing the government millions in tax revenue.

“Incorporating yourself as a driver, without owning/operating your own truck, has significant labor law and tax implications. Many drivers and companies utilizing this system seem to think Driver Inc. is some previously undiscovered tax oasis. It’s not. It’s a mirage,” says Laskowski. “The tax filing implications make the Driver Inc. model a very questionable approach to legitimately increasing drivers’ take-home pay. Obviously not declaring your income is a highly illegal method to increasing pay, made easier by the fact that CRA does not always find businesses that don’t issue T4A’s to contractor drivers.”

The CTA wants the Canada Revenue Agency to ensure that companies and drivers are paying their fair share of taxes by filing as a Personal Services Business (PSB), with all company drivers issued a T4 or T4A in 2018.