Canadian trucking groups sound alarm over 'tax scam,' call on CRA to step in

Stephen Laskowski, President of the Canadian Trucking Alliance, speaks during a press conference declaring a crisis in Canada's trucking sector on Parliament Hill in Ottawa, on Tuesday, May 16, 2023. THE CANADIAN PRESS/Spencer Colby

Several groups representing Canadian truckers are calling on the Canada Revenue Agency (CRA) to help end what they call a “tax scam” impacting their industry, which has been going on for years, but has reached the “crisis” level.

The groups said at a press conference Tuesday they want to see an end to the “Driver Inc.” model, which they call a “tax evasion and employee misclassification scam,” and “labour abuse funded by a tax scheme.”

According to the Canadian Trucking Alliance (CTA), the “Driver Inc.” model is when a trucking company tells its drivers to register as a corporation “to sell their driving services to the carrier.”

“What distinguishes these individuals from ‘owner-operators’ is they do not own, lease or operate a vehicle. Instead they drive the carrier’s vehicles and are virtually indistinguishable from an ‘employee’” the CTA says.

The organization says the practice allows carriers and drivers to avoid certain tax obligations. But because these drivers don’t get recognized as employees, this has the knock-on effects on the industry of making it harder for drivers to access employment insurance, overtime and vacation pay, severance, sick days, and medical and dental benefits.

The group raising concerns — made up of Teamsters Canada, the Canadian Trucking Alliance (CTA), and the Association du Camionnage du Québec (ACQ) — also estimates the practice allows carriers and truckers to avoid paying $1 billion a year in taxes.

“Put into its simplest form, Driver Inc. is a practice of misclassifying drivers of company owned equipment as independent contractors in order to sell their driving services back to that carrier,” explained John McCann, the national freight and tank haul director for Teamsters Canada. “By doing this, those carriers are able to reduce their operational expenses and drastically undercut industry rates by avoiding payment of mandatory employee related service deductions.”

McCann said another key issue is the practice gives some carriers an unfair advantage over others, and called it “an abuse of vulnerable workers.”

They’re calling on the CRA to audit carriers and implement enforcement measures for those who make use of the Driver Inc. practice.

CRA spokesperson Hannah Wardell wrote in an email to CTVNews.ca the CRA is in regular contact with the CTA and is “aware of their concerns.”

She also said the CRA held an educational campaign last fall to help businesses understand their tax responsibilities, but did not say whether efforts are underway to cut down on the Driver Inc. practice specifically.

“When non-compliance is identified, the CRA educates the taxpayer on their income tax obligations, ensures the correct returns are prepared and filed, and takes the necessary enforcement actions to ensure compliance with the law,” Wardell wrote.

Mariam Abou-Dib, the executive director of Teamsters Canada, said while the federal labour and transport ministries have both been receptive to concerns from the trucking industry about Driver Inc., CRA is a “missing partner” in making more substantive changes.

Stephen Laskowski, president of the CTA, said there are many drivers who engage in the practice willingly, while for others there is a lack of understanding from some drivers about the greater impacts on the industry.

“Regardless, enforcement needs to happen” he said. “This is a crisis.