The upcoming budget is set to allocate funds to combat a tax evasion scheme known as “Driver Inc.” in the trucking industry, which has been criticized as a $1 billion scam. The scheme involves misclassifying drivers as independent contractors instead of employees to avoid payroll taxes.
In the federal budget scheduled for unveiling on November 4, the government plans to invest $19.2 million annually starting in 2026-27 to address this issue. The allocated funds will assist the Canada Revenue Agency in enhancing compliance efforts.
Jobs Minister Patty Hajdu emphasized the importance of addressing misclassification, stating that it exploits workers, depriving them of their rights and creating an unfair advantage for companies that abide by the rules. The focus is on protecting vulnerable workers, many of whom are newcomers to Canada.
The funding will enable the CRA to remove penalties for failing to report service transaction fees on T4A slips and establish a program to tackle non-compliance issues related to personal services businesses and fee reporting.
Stephen Laskowski, the President and CEO of the Canadian Trucking Alliance, has been advocating on this issue for nearly a decade, urging governmental action. The Bloc Québécois claimed a political victory as tax reform to address the Driver Inc. scheme was among the requests they made to the federal government.
Transport Minister Steven MacKinnon acknowledged that the government’s response directly aligned with the Bloc’s request. Although progress has been made, there are calls for further action and a formal inquiry into driver exploitation within the industry.
Amid discussions at the committee, concerns were raised about the persistence of the Driver Inc. problem despite previous reform attempts. The misclassification of truck drivers has been linked to past deregulation policies, emphasizing the need to address regulatory loopholes to combat fraudulent practices effectively.