The Canada Revenue Agency (CRA) has confirmed it has launched a focused compliance program targeting personal service businesses in the trucking industry, as owner-operators and tax professionals warn legitimate independent contractors may be getting caught up in the crackdown.
The confirmation follows a trucknews.com report in which Scott Taylor, vice president of Transport Financial Services, said his firm was handling six CRA reviews involving incorporated owner-operators who own their own trucks but haul exclusively for a single carrier.
CRA said Budget 2025 provided funding to lift a moratorium on assessing penalties for failure to report fees-for-service transactions in trucking and to implement a focused program addressing non-compliance related to personal service businesses and reporting fees for service.
“These investments and measures are not only enhancing the CRA’s ongoing compliance work in this sector, but also ensure that both PSBs and the companies that hire them are meeting their specific tax obligations,” CRA spokesman Benoit Sabourin said in a statement responding to questions from trucknews.com.
The agency said an incorporated truck driver may be considered to be operating a PSB when the services provided would otherwise normally be performed by an employee of the carrier.
Under the Income Tax Act, five conditions must be met for a corporation to be considered a PSB. The key test in many trucking cases is whether the worker would reasonably be considered an employee of the carrier if the corporation did not exist.
CRA said it does not rely on a single factor when making that determination.
“The CRA does not use one single factor to determine if a worker would be reasonably considered an employee if not for the existence of the corporation, but looks at the full facts of the situation,” Sabourin said.
“Ownership or full control of a truck under a lease arrangement is one of many factors that is considered in making this determination.”
That explanation conflicts with what several tax professionals say they are seeing in practice.
Taylor said CRA auditors appear to be placing too much emphasis on the fact that many owner-operators haul for only one carrier, while giving insufficient weight to truck ownership, operating costs, financial risk and the ability to hire another driver or move to a different carrier.
One Ontario owner-operator represented by Taylor was reassessed for about $130,000 after fuel, repair and other operating expenses were disallowed.
Separately, a B.C.-based owner-operator who asked not to be identified told trucknews.com he spent more than 40 years in trucking before selling his truck last October and semi-retiring.
He said he hauled for the same carrier as an owner-operator and independent contractor for 28 years under a Unifor labor agreement. He incorporated in 2002 and said he consistently filed corporate tax returns, remitted GST and used a reputable accountant throughout his business career.
Despite that history, he received a CRA request for information on June 30 requiring him to prove his corporation was not operating as a PSB.
“I now find myself in the same dilemma after working for the same company as an owner-operator-independent contractor for 28 years,” he wrote in an email to trucknews.com.
He said CRA is requesting information it already has through years of tax filings, as well as information he does not have because he never operated under the type of business arrangement the agency appears to be investigating.
“This is very upsetting and I find myself scrambling for answers before the timeline arrives,” he said.
The owner-operator said trucking took the best years of his life and that his decision to step away was a personal one made so he could spend more time with his family while still in good health.
His case differs from the Driver Inc. arrangements that have drawn growing scrutiny in recent years. He owned his equipment, had been incorporated for more than two decades and operated as an owner-operator for nearly three decades before retiring.
Accountants are reporting similar cases.
Kevin van Delden said his accounting firms have two incorporated trucking companies under CRA review. One case has advanced to the notice-of-objection stage, while the other remains in the initial review process.
He said auditors appear to be focusing heavily on whether the business had one main customer while overlooking obvious signs of an operating trucking company.
“How can the CRA look at a corporate tax return showing ownership of a commercial truck worth several hundred thousand dollars, along with tens of thousands of dollars in fuel, repair and insurance expenses, and then come to the conclusion that this must be a PSB?”
He said a trucking corporation with no equipment, no operating expenses and only service income would present a more obvious case for review.
Taylor supports CRA’s efforts to address illegitimate Driver Inc. arrangements, but said legitimate owner-operators should not become collateral damage.
He argues that hauling for one carrier is common in trucking because owner-operators depend on the carrier’s insurance, operating authority, permits and customer freight.
“You can leave whenever you want. You can hire another driver to operate your truck. You own the equipment. You have the risk of profit. You pay for the repairs and the fuel,” Taylor previously told trucknews.com.
The agency’s confirmation of a focused trucking compliance program helps explain why similar reviews are emerging from different CRA offices.
But the disagreement remains over how auditors are applying the rules and whether long-established owner-operators are being treated fairly.
Transport Financial Services is filing notices of objection on behalf of affected clients and is encouraging other owner-operators who have received similar reviews or reassessments to come forward. Have you had a similar experience? We’d like to hear about it. Email details to [email protected].
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