CRA Scrutiny of Incorporated Drivers in the Trucking Industry.

The Canada Revenue Agency (CRA) has significantly increased its focus on

incorporated drivers in the trucking and transportation industry. Both incorporated

drivers and trucking companies are facing a growing number of audits where CRA is

challenging whether these arrangements represent true independent contracting or

disguised employment.

This issue carries serious tax and compliance risks for all parties involved and is an

area where proactive review can prevent costly reassessments.

Why CRA Is Focusing on the Trucking Industry

The trucking industry frequently uses incorporated drivers and owner-operators. While

incorporation alone is not problematic, CRA is concerned where:

• Drivers work primarily or exclusively for one carrier

• The carrier controls dispatch, routes, schedules, and loads

• Trucks, trailers, insurance, fuel cards, or permits are carrier-owned

• Drivers have limited ability to refuse loads or subcontract work

• Drivers bear little financial risk or opportunity for profit
  

CRA looks beyond written contracts and evaluates the actual day-to-day working

relationship. Where the facts resemble employment, CRA may reclassify the

arrangement.

Risks for Incorporated Drivers

If CRA determines that an incorporated driver is effectively an employee, the

corporation may be classified as a Personal Service Business (PSB). This can result in:

• Loss of the small business deduction

• Significantly higher corporate tax rates

• Disallowance of many business expenses

• Retroactive reassessments for multiple years

• Penalties and interest

Risks for Trucking Companies and Carriers

Carriers engaging incorporated drivers are not insulated from risk. If CRA reclassifies

drivers as employees, the carrier may be assessed for:

• Unremitted CPP contributions (both employer and employee portions)

• EI premiums

• Penalties and interest

• Expanded audits covering other drivers with similar arrangements

• Potential exposure under provincial employment standards legislation

Common Misconceptions

Many taxpayers assume that risk is eliminated if:

• The driver is incorporated

• A contractor agreement is in place

• Invoices are issued monthly

  
  

Unfortunately, these factors alone do not determine CRA’s position. Control, integration,

and economic dependence carry greater weight than legal form.

Proactive Planning Is Critical

Once CRA initiates an audit, options become limited and costly. Proactive review allows

drivers and carriers to:

• Identify high-risk arrangements early

• Correct structural or operational issues

• Improve documentation and compliance

• Reduce exposure before CRA involvement

CRA Risk Review – Proactive Advisory Service

We offer a CRA Risk Review designed specifically for the trucking industry. This

advisory engagement includes:

• Review of current driver or carrier arrangements

• Assessment against CRA employment-status criteria

• Identification of specific risk factors

• A written summary of exposure and practical recommendations

This review is intended to provide clarity and allow informed decision-making before an

audit occurs.

How We Can Help

If you are an incorporated driver or a trucking company using incorporated drivers, we

encourage you to seek professional advice sooner rather than later.

For more information or to discuss a CRA Risk Review, please contact:

Jewan Bhullar, CPA, CA

Jewan Bhullar Chartered Professional Accountant Inc.

204-509-0029

jewan@risecpallp.ca

This article is intended for general information purposes only and does not constitute

professional tax or legal advice.