Blog › Truck drivers & owner-operators
Short answer Driver Inc. is when a truck driver who works like one carrier's employee incorporates and invoices that carrier as a contractor. Incorporating is legal, but the CRA usually treats that company as a personal services business: taxed at about 44.5% in Ontario, with few deductions. So should a truck driver incorporate? Mainly a genuine owner-operator.
In this guide
- What is Driver Inc.?
- Why does the CRA call many driver corporations a personal services business?
- What changed with T4A slips for trucking companies?
- Am I an employee or a contractor? The tests the CRA, WSIB and Ontario use
- Should a truck driver incorporate? When it makes sense
- Already incorporated and driving for one carrier: what now?
- Key dates and numbers
What is Driver Inc.?
"Driver Inc." is the industry name for a truck driver who sets up a corporation and bills a carrier for driving, even though the driver works like that carrier's employee: the carrier's truck, the carrier's dispatch, one customer. The carrier pays the corporation with no payroll deductions, so it skips CPP, EI, vacation pay and WSIB premiums. Transport Canada describes drivers who "sell their services to carriers through an incorporated personal services business arrangement."Drivers meet it from both sides. One wrote on r/canadarevenueagency that a carrier "requested I incorporate my services so they could issue direct payments to me without deducting taxes upfront." A payroll driver on r/Truckers asked: "Anyone from Canada under an incorporation? Is it worth it?"
Is Driver Inc. legal? Incorporating is legal. The CRA says a trucking worker "can choose to provide your services through a corporation, but you must understand and meet your specific tax obligations." The problem starts when the company files as an ordinary small business while the facts say employee.
Why does the CRA call many driver corporations a personal services business?
A corporation is a personal services business (PSB) when it meets all five of the CRA's conditions:- The worker provides their services through a corporation.
- The worker (or a related person) owns at least 10% of any class of shares (a "specified shareholder").
- The corporation has five or fewer full-time employees throughout the year.
- The payer is not an associated corporation.
- If the corporation did not exist, the worker would reasonably be considered an employee of the payer.
The fifth condition decides most trucking files. A one-truck, one-driver company that drives only for one carrier, in the carrier's equipment, usually meets all five.
What does PSB status cost in tax?
PSB income loses the two breaks that make incorporating attractive. The CRA's PSB pages say a PSB:
- cannot claim the small business deduction or the general rate reduction
- pays the full federal and provincial corporate rates plus an extra 5%
- can deduct only salary, wages and benefits paid to the incorporated employee, certain costs of negotiating contracts, and legal fees to collect amounts owed. Fuel, phone, meals and similar costs are generally not deductible.
In Ontario that works out to roughly 44.5% corporate tax on PSB profit (33% federal plus 11.5% Ontario), against 11.2% for an eligible small business (9% federal plus Ontario's 2.2% lower rate, which applies from July 1, 2026). And that is before you take the money out personally.
Worked example (illustration only, round numbers, full-year 2026-onward rates): a driver's corporation bills $90,000, pays the driver $70,000 salary and keeps $20,000 in the company.
| Taxed as a small business | Reassessed as a PSB | |
|---|---|---|
| Corporate tax on the $20,000 kept | about $2,240 | about $8,900 |
| Other expenses claimed (fuel, phone, etc.) | deductible if business-related | mostly denied, raising taxable profit |
| Plus | interest, and possible penalties, on earlier years |
The salary is deductible either way. The cost comes from profit kept in the company, expenses that are now denied, and interest on earlier years.
What changed with T4A slips for trucking companies?
On December 4, 2025, the CRA lifted the moratorium on penalties for not reporting fees for services in the trucking industry, starting with the 2025 tax year. Since 2011, the CRA had not penalised anyone for leaving box 048 of the T4A slip blank. That pause is over for trucking.- A business in the trucking industry (more than 50% of gross revenue from trucking, including brokers and staffing agencies) that pays a Canadian-controlled private corporation in trucking more than $500 in a calendar year must report it in box 048, Fees for services, of a T4A slip.
- Slips are due by the last day of February of the following year. For 2025, slips received or postmarked by March 2, 2026 were on time, because February 28 was a Saturday.
For a Driver Inc. corporation, this means the CRA now gets a slip showing who paid you and how much. The CRA says it is "reviewing PSBs, particularly those in the trucking industry," and Budget 2025 funds a dedicated PSB compliance program ($77.0 million over four years from 2026-27).
Am I an employee or a contractor? The tests the CRA, WSIB and Ontario use
You are probably an employee in substance if the carrier controls the work and you carry no real business risk. The contract's label does not decide it. The facts do.The CRA's truck-driver indicators (from CPP/EI explained: Truck drivers):
| Points to employee | Points to self-employed |
|---|---|
| Must accept all loads and follow set routes | Picks loads and chooses routes |
| Carrier owns the truck and pays fuel, insurance, repairs | You own or fully control the truck and pay its costs |
| Carrier sets your pay rate | You negotiate rates when the contract is signed or renewed |
| Can't haul for others without approval | Works for other payers; keeps backhaul profits |
| Carrier finds your replacement | You hire and pay your own replacement or helpers |
| No business presence | Business name, own insurance, GST/HST account, invoices, separate bank account |
Rules the law imposes on every driver (logbooks, hours of service, circle checks) are neutral: following them doesn't make you an employee.
WSIB. WSIB says incorporated owner-operators "aren't automatically assumed to be independent operators." To qualify, you must pay for the truck and most of the equipment, choose your own vehicle, and be free to contract with others. If WSIB rules you a worker, the carrier owes the premiums, possibly back to day one. If you're an independent operator, you have no coverage unless you buy optional insurance.
Employment standards. Ontario's Employment Standards Act (s. 5.1) bars employers from treating employees as non-employees, whatever the contract says. Carriers that cross provincial or national borders generally fall under the federal Canada Labour Code. Since 2024, the Code presumes a paid worker is an employee and puts the burden of proof on the employer (ss. 167.01 to 167.2). For your own facts, ask an employment lawyer.
Should a truck driver incorporate? When it makes sense for an owner-operator
Incorporating makes sense when you run a real trucking business rather than selling your labour to one carrier. Strong cases have most of these:Own authority, multiple customers, own truck
- Your own truck, owned or fully controlled under a lease, with you paying its costs.
- Your own operating authority (in Ontario, your own CVOR certificate [verify]) or freedom to pick which carriers and shippers you haul for.
- More than one customer, with real freedom to turn loads down.
- Real profit and loss: fuel, repairs and empty miles are your risk.
- Profit you can leave in the company, since the low rate only helps on money you don't spend this year.
- Staff: more than five full-time employees all year means no PSB.
A corporation still adds costs: a yearly T2 return, bookkeeping and payroll. A smaller operation may do just as well as a sole proprietor claiming owner operator write-offs Canada. When the numbers support it, we can incorporate your business in Ontario and set up payroll and HST from day one.
Already incorporated and driving for one carrier: what now?
If you drive one carrier's truck, for that carrier only, assume the CRA will look at your corporation as a PSB and get ahead of it.- Test yourself honestly against the five conditions and the indicators above.
- Match your T4A. A trucking carrier that paid you for 2025 should have issued a T4A with box 048. Your T2 revenue should match it.
- File as a PSB if you are one: no small business deduction, the extra 5%, and only the allowed expenses.
- Pay yourself salary through payroll. It's deductible, so little profit is left to be taxed at PSB rates.
- Fix past years before the CRA calls. The Voluntary Disclosures Program can grant relief, case by case, to people who come forward first.
- Talk to the carrier about moving to payroll. If you were pushed into incorporating, get an employment lawyer's view.
One limit: the CRA says you cannot ask it for a CPP/EI ruling on whether you'd be the carrier's employee if your corporation didn't exist.
Incorporated or not, what records protect you?
Keep evidence that matches the status you claim: contracts and invoices for every customer, truck ownership or lease papers, insurance in your name, receipts paid from a separate business account, T4A slips, GST/HST returns and WSIB letters. Keep logbooks and trip records too. If you're an employee, they also support your TL2 claim for meals and lodging.
Key dates and numbers
*Last reviewed: October 28, 2026. Figures change: check each against the linked CRA page every January.*| Item | Figure |
|---|---|
| T4A penalty moratorium lifted for trucking | December 4, 2025 (applies from the 2025 tax year) |
| T4A reporting threshold | More than $500 in a calendar year, box 048 |
| 2025 T4A deadline | February 28, 2026 (on time if received or postmarked by March 2, 2026) |
| 2026 T4A deadline | Last day of February 2027 [verify exact date: February 28, 2027 is a Sunday] |
| PSB corporate tax, Ontario | About 44.5% (33% federal + 11.5% Ontario) |
| Small-business rate, Ontario | 11.2% (9% federal + 2.2% Ontario, from July 1, 2026; was 3.2%) |
| GST/HST registration | Over $30,000 in taxable revenue in a quarter or four consecutive quarters |
| Budget 2025 enforcement funding | $77.0M over four years from 2026-27, then $19.2M a year |
What we see with clients [OWNER: add a real anonymised example, e.g. an incorporated driver for one carrier and what we found and fixed. Leave this box out if there isn't one. Do not invent.]
FAQ
My carrier says I have to incorporate or I don't get the job. Is that allowed? A carrier can offer contractor work, but the contract's label doesn't decide your status: how you actually work does. In their truck, on their dispatch, for them only, the CRA is likely to see a PSB, and WSIB and employment-standards rules may still see an employee.
Can the CRA reassess earlier years? Yes. The penalty change covers carriers' slips from 2025 on, but the CRA can still review your corporation's earlier returns. That's why it pays to fix past years early.
Do I need a GST/HST number as an incorporated driver? Yes, once taxable revenue passes $30,000 in a quarter or over four consecutive quarters. Registering for HST doesn't make you self-employed in the CRA's eyes.
Is an owner-operator with their own truck safe from PSB rules? Not automatically. An owner-operator leased exclusively to one carrier, with no say over loads or rates, can still look like an employee.
Every situation is different. This is general information, not advice for your file.
Not sure which side of the line you're on? We'll look at your contract, T4A and corporate filings and tell you plainly where you stand. [Book a free 15-minute call]
Sources
- Canada Revenue Agency, CRA strengthens compliance in trucking sector by lifting the moratorium on T4A penalties (news release, December 4, 2025): https://www.canada.ca/en/revenue-agency/news/2025/12/cra-strengthens-compliance-in-trucking-sector-by-lifting-the-moratorium-on-t4a-penalties.html
- Canada Revenue Agency, Compliance requirements for the trucking industry: https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/requirements-trucking-industry.html
- Canada Revenue Agency, Reporting fees for service: https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/reporting-fees-for-service.html
- Canada Revenue Agency, Trucking industry: Make sure you're meeting your reporting obligations (tax tip, February 5, 2026): https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2026/trucking-industry-meeting-reporting-obligations.html
- Canada Revenue Agency, Determine if the worker's corporation is carrying on a PSB: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-income-tax-return/tax-implications-personal-services-business/factors-psb.html
- Canada Revenue Agency, Understand your obligations as a corporation carrying on a PSB or the payer of a PSB: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-income-tax-return/tax-implications-personal-services-business/obligations-psb.html
- Canada Revenue Agency, Fact sheet: Personal services business: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-income-tax-return/tax-implications-personal-services-business/fact-sheet-personal-business.html
- Canada Revenue Agency, Corporation tax rates: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-tax-rates.html
- Canada Revenue Agency, CPP/EI explained: Truck drivers: https://www.canada.ca/en/revenue-agency/services/tax/canada-pension-plan-cpp-employment-insurance-ei-rulings/cpp-ei-explained/truck-drivers.html
- Department of Finance Canada, Minister Champagne clamps down on Driver Inc. scheme in Budget 2025 (October 30, 2025): https://www.canada.ca/en/department-finance/news/2025/10/minister-champagne-clamps-down-on-driver-inc-scheme-in-budget-2025.html
- Transport Canada, 13. PIC – Driver Inc. (briefing binder): https://tc.canada.ca/en/binder/13-pic-driver-inc
- Canada Revenue Agency, Voluntary Disclosures Program: https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/voluntary-disclosures-program-overview.html
- WSIB, Transportation industry: determining worker/independent operator status: https://www.wsib.ca/en/forms/transportation-industry and Independent operators: https://www.wsib.ca/en/businesses/registration-and-coverage/independent-operators
- Government of Ontario, Your guide to the Employment Standards Act: Employee status: https://www.ontario.ca/document/your-guide-employment-standards-act-0/employee-status and ESA Policy and Interpretation Manual, Part III (s. 5.1): https://www.ontario.ca/document/employment-standard-act-policy-and-interpretation-manual/part-iii-how-act-applies
- Justice Laws, Canada Labour Code, ss. 167.01, 167.1, 167.2: https://laws-lois.justice.gc.ca/eng/acts/L-2/FullText.html
[Author + reviewer box: photo, credentials, languages, link to /about/]
Related
- Hub: taxes for truck drivers and owner-operators
- owner operator write-offs Canada
- TL2 claim for meals and lodging
- Service: incorporate your business in Ontario
