The government has announced plans to allocate funds in the upcoming budget to address a tax evasion scheme within the trucking industry known as “Driver Inc.,” which has been criticized as a $1 billion scam. This scheme involves companies misclassifying drivers as independent contractors instead of employees to avoid paying proper payroll taxes.
As part of the federal budget, set to be presented on November 4, the government intends to allocate $19.2 million annually starting from 2026-27 to combat this issue. The funds will be directed towards enhancing compliance efforts by the Canada Revenue Agency (CRA).
Jobs Minister Patty Hajdu emphasized the importance of addressing misclassification, stating that it exploits workers, undermines their rights, and creates an unfair advantage for companies that adhere to regulations. The move aims to protect vulnerable workers, including newcomers to Canada, who rely on the system for their well-being.
The CRA will utilize the allocated funds to revoke penalties for failing to report service fees on T4A slips and establish a program to tackle non-compliance in personal services businesses and fee reporting.
Stephen Laskowski, the President and CEO of the Canadian Trucking Alliance (CTA), has been advocating for government action on this issue for almost a decade. He has raised concerns about the escalating crisis of compliance, road safety, drug trafficking, human rights violations, and tax fraud within the industry.
The Bloc Québécois, in its pre-budget requests, highlighted the need for tax reforms to address the Driver Inc. problem. Transport Minister Steven MacKinnon acknowledged that the government’s response aligns with one of the Bloc’s demands.
While Bloc Québécois transport critic Xavier Barsalou-Duval welcomed the government’s actions, he stressed the need for further measures and called for an official inquiry into driver exploitation in the trucking sector. Conservative MP Philip Lawrence pressed for a definitive timeline to resolve the Driver Inc. issue during a committee session.
Hajdu linked the misclassification of truck drivers to deregulation under the previous administration, which led to a moratorium on penalties for incomplete T4A entries. Witnesses recommended lifting the moratorium to track down those involved in the Driver Inc. scheme effectively.
Overall, the government’s budget allocation and regulatory changes aim to curb tax evasion practices, protect workers’ rights, and ensure fair competition within the trucking industry.