The government has announced plans to allocate funds in the upcoming budget to combat a tax-evasion scheme known as “Driver Inc.,” which the trucking industry has criticized as a $1 billion fraudulent practice. 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 unveiled on November 4, the government intends to allocate $19.2 million annually starting in 2026-27 to address this issue. The funds will be used by the Canada Revenue Agency to enhance compliance efforts.
Jobs Minister Patty Hajdu emphasized the importance of addressing misclassification, stating that it exploits workers, deprives them of their rights, and creates an unfair advantage for companies that comply with regulations. The minister highlighted that vulnerable workers, including newcomers to Canada, are often the most affected by such practices.
The allocated funds will enable the CRA to lift a moratorium on penalties for non-reporting of service fees on T4A slips and implement measures to tackle non-compliance issues related to personal services businesses and fee reporting.
The President and CEO of the Canadian Trucking Alliance, Stephen Laskowski, has been advocating for government action on the Driver Inc. issue for nearly a decade. He has warned of the escalating compliance, safety, and fraud problems within the industry due to unchecked practices like misclassification.
The Bloc Québécois, in its pre-budget requests to the government, included tax reforms to address Driver Inc. as one of its 18 demands. Transport Minister Steven MacKinnon acknowledged that the government’s response directly aligns with one of the Bloc’s requests.
While commending the government for its actions, Bloc Québécois transport critic Xavier Barsalou-Duval emphasized the need for further measures and called for a formal inquiry into driver exploitation in the trucking sector. Conservative MP Philip Lawrence pressed Minister Hajdu for a definitive timeline on resolving the Driver Inc. issue, to which she attributed the problem to past regulatory changes.
Witnesses at a committee meeting highlighted the significance of ending the moratorium on penalties to track down entities engaging in the Driver Inc. scheme. Minister Hajdu acknowledged the importance of regulations in addressing such fraudulent practices.
