There has been a recent spike in the numbers of trucking companies that are undergoing audits by the CRA.
This is primarily the result of increases in the number of so-called “Driver Inc.” companies. These are drivers who report their trucking income as if it is corporate business income, even though the drivers should be considered to be employees of the trucking company who has hired them.
The trucking company oftentimes owns the truck, but because of difficulties in finding qualified drivers, they will pay their drivers as if they were corporate entities.
If these audits uncover that these “Driver Inc.” companies are actually in employee/employer relationships, the CRA will assess penalties to both the trucking company as well as the driver.
In addition, the driver will have to report their income as Personal Services Business income in their company, which could result in significantly higher taxes payable than if they had reported the income as regular employment income.
The driver would also not be allowed to claim most expenses as a deduction against their income.
Trucking companies and drivers are being warned to review their employment situation to ensure that they are onside with the taxation rules.