Driver Inc

CRA & ESDC Clarify Status of Driver Inc & Enforcement to Trucking Industry

The Canada Revenue Agency (CRA) and Employment and Social Development Canada (ESDC) have clarified how they will treat the practice of so-called Driver Inc. by removing any grey area as it relates to the tax and labour status of incorporated drivers operating company vehicles.

The Driver Inc. model is based on commercial vehicle drivers, who d onot own/lease or operate their own vehicle, becoming incorporated and receiving payment from their carrier with no source deductions. This practice opens the door to the possiblitiy of widespread tax manipulation by those engaged in Driver Inc.

In documentation provided to CTA and now published on the agency's website, CRA explains that while it cannot legally deny any Canadian's right to incorporate, there are limits in circumstances involving Driver Inc. If, then, an individual incorporates but has labour characteristics virtually indistinguishable from an employee - for example, working exclusively for one employer or not owning/having registered any equipment assets - that person is deemed a Personal Service Business (PSB).

CRA explained to the CTA Board the following facts regarding the tax treatment of PSBs:

  • PSBs are not entitled to income tax deductions available to other corporations (e.g., the small business deduction and the general rate reduction).
  • PSB cannot deduct most expenses available to other corporations (e.g., office supplies, meals, cell phone, etc.).
  • PSBs are subject to a combined federal and provincial tax rate of 33%.
  • Amounts paid by one business for services provided by another business must be reported to the CRA but are not subject to statutory payroll deductions.
  • If the corporation pays salary and wages to one or more employees, these amounts will be subject to withholding of income tax, CPP and, in some cases, EI.

Click here for the full CRA documentation clarifying the agency's position and enforcement policy.

Consequently, the CRA states that beginning tax year 2018, all payments made to self-employed individuals deemed to be PSBs, like incorporated drivers and owner-operators, must be reported on a T4A slip - Statement of Pension, Retirement, Annuity and Other Income. This is in line with measures already in effect and consistent with how the agency treats all other sectors of the economy, like construction workers.

Read the full article on the Canadian Trucking Alliance website by clicking here.

Safety First Commitment

TransX understands that dependable deliveries start with a commitment to safety. That’s why TransX’s first Guiding Principle is to “always exercise the best practices for the protection of our people, our customers and the public.” To this end TransX employs the following safety first practices:

Innovation

Innovation is a dominant theme within TransX’s culture and TransX is always on the look-out for new processes and technologies that can benefit our customers. In fact, many of the processes we use today we developed ourselves in response to a customer’s specific need or challenge. Additionally, while we may not invent the technologies we use, we always seek to find innovative ways to push them to the limits of their applications.

Below are just a few of the innovative ways TransX has found to better serve its customers:

  • Shunt and transfer service for customers with multiple production and distribution centers within a set geographic area.
  • Two-way satellite communication on all TransX highway trucks.
  • Satellite-based remote temperature-monitoring on intermodal containers.
  • Remote yard rental for secure storage of loaded trailers off the customer’s property.
  • Trailers capable of multiple climate zones (multi-temps) for simultaneous distribution of fresh and frozen foodstuffs.
  • A proprietary computer system developed in-house that allows for rapid customization to meet our customers’ unique tracking and reporting needs.
  • Secure C-TPAT certified terminals with 24/7 monitored gates and biometric scanning (high volume terminals).
  • All terminals have specialized doors that allow for trailers with “barn doors” to be opened from the cross-dock thus eliminating the need for the driver to open the doors prior to backing into the loading door. Some customers have since replicated this innovation as they have built their own, new shipping and receiving facilities.
  • TransX mitigates fuel costs with a proprietary model to purchase diesel on the spot market.

Community

TransX is committed to being actively involved in all communities in which we have a presence.
Corporately, we have supported numerous charities and organizations including the Canadian Human Rights Museum, Ducks Unlimited, the Pan-Am Clinic and Manitoba’s Italian Chamber of Commerce.