Article Summary
The Canadian federal government is closing the Driver Inc. loophole that allows trucking companies to misclassify employees as incorporated contractors, avoiding payroll taxes and labour protections. Budget 2025 includes $77 million over four years for the Canada Revenue Agency to increase audits and enforcement against non-compliant operators.
- The Driver Inc. model allows trucking companies to classify drivers as independent contractors through numbered companies, avoiding payroll taxes, benefits, and labour protections
- Budget 2025 allocates $77 million over four years, plus $19.2 million annually, to the CRA for increased audits and data sharing with employment agencies
- The federal government is lifting the moratorium on T4A penalties in the trucking industry to enforce tax compliance and worker misclassification rules
- The crackdown aims to level the playing field for compliant trucking fleets and ensure drivers access employment insurance and Canada Pension Plan contributions
- Insurance Bureau of Canada supports the initiative as it helps curb fraud and reduce risk exposure for insurers and compliant operators
Toronto, Ontario -- The federal government is shutting down on a loophole used in Canada's trucking sector allowing companies to avoid payroll taxes, benefits and labour protections
The so-called Driver Inc. model allows trucking companies to classify drivers as incorporated contractors rather than employees, avoiding payroll taxes, benefits and labour protections.
Under the arrangement, drivers are often required to set up numbered companies and invoice for their work even though they operate company trucks, wear company uniforms and take dispatch instructions like employees. Critics say the practice denies drivers access to employment insurance and Canada Pension Plan contributions while letting carriers undercut competitors that comply with the law.
“Budget 2025 is cracking down on Driver Inc., closing loopholes, making our roads safer and standing up for drivers and businesses that play by the rules,” said Finance and National Revenue Minister François-Philippe Champagne.
“We are lifting the moratorium on T4A penalties in the trucking industry as part of a series of targeted measures to combat misclassification. In doing so, we are working to guarantee the benefits workers are entitled to, improve safety for Canadians and ensure that everyone pays their fair share.”
The federal plan includes $77 million over four years, followed by $19.2 million annually, for the Canada Revenue Agency to increase audits and share data with Employment and Social Development Canada. The move ends a moratorium that had limited enforcement against unreported service-fee transactions, giving the CRA new tools to target non-compliant operators.
“Truckers keep our country and our economy moving,” said Transport Minister Steven MacKinnon. “They deserve fair pay and the benefits that come with the vital work they do every day. This is essential to keep Canada’s supply chains strong.”
Secretary of State for the CRA and Financial Institutions Wayne Long said the changes will “level the playing field” by ensuring compliant fleets are not disadvantaged. “With the budget measures we are proposing, we will be strengthening tax compliance to ensure everyone pays their fair share in supporting the programs and services Canadians depend on,” he said.
Jobs Minister Patty Hajdu said the reforms reflect Ottawa’s broader economic priorities. “To build the strongest economy in the G7 we need a strong and skilled workforce,” she said. “We are taking the next steps to ensure a level playing field for the trucking industry and its drivers.”
In an online post, the Insurance Bureau of Canada said the initiative will help curb fraud in commercial trucking by closing loopholes that allow misclassification to persist. The bureau said the crackdown supports fair competition and helps reduce risk exposure for insurers and fleets operating within federal and provincial rules.
