CRA Crackdown on Trucking Industry: New Reporting Requirements for 2025

 

 

CRA Crackdown on Trucking Industry: New Reporting Requirements for 2025

 

The Canada Revenue Agency just released significant news that will affect trucking companies and owner-operators across the country. If you operate in the trucking industry or work with trucking companies in Chilliwack, the Fraser Valley, or anywhere in British Columbia, you need to understand these changes.

Let me break down what this means for you in plain language.

 

What the CRA Announced

The CRA is cracking down on tax non-compliance in the trucking sector, specifically targeting Personal Service Businesses (PSBs) and trucking companies that force their employees to incorporate to avoid paying payroll taxes.

Here is the key change: As of January 1, 2025, the CRA has lifted the moratorium on penalties for failing to report fees for services in the trucking industry.

This is a big deal. For years, the CRA paused penalties while the industry adjusted to reporting requirements. That grace period is over.

 

Why the CRA is Taking Action

According to the CRA’s news release, tax non-compliance in the trucking sector has allowed some companies to avoid tax obligations. This creates two serious problems:

It undercuts compliant competitors. Trucking companies that follow the rules and pay proper payroll taxes are at a competitive disadvantage when others do not.

It denies workers the benefits and pensions they have earned. When drivers are forced to incorporate instead of being treated as employees, they miss out on Employment Insurance, Canada Pension Plan contributions, workers’ compensation coverage, and other employment benefits.

The CRA states that trucking is vital to connecting Canada’s vast and expansive territory and bridging our united economies. These new enforcement measures aim to restore fairness to the industry.

 

What Changes for the 2025 Tax Year

Starting with the 2025 tax year, businesses in the trucking sector will now be assessed penalties if they fail to report payments for services exceeding $500 in a calendar year that are made to a Canadian-controlled private corporation in the trucking industry.

Here is what you need to know:

1. Reporting Requirement:
   Payments must be reported to the CRA in box 048 – fees for services of the T4A slip by February 28, 2026.
2. Threshold:
   Any payment exceeding $500 in a calendar year must be reported.
3. Who This Affects:
   A business is considered to be operating in the trucking industry if more than 50% of its primary source of income is from trucking activities.
4. Penalties:
   The CRA will now assess penalties for non-compliance. Previously, these penalties were suspended, but that moratorium has been lifted.

 

What This Means for Trucking Companies

If you operate a trucking company and pay owner-operators or incorporated drivers, you need to ensure proper reporting starting immediately.

Action Steps:

1. Review your current structure. Are you treating drivers as independent contractors when they should be employees? The CRA is scrutinizing these arrangements.
2. Track payments carefully. You must report all payments exceeding $500 to Canadian-controlled private corporations in the trucking industry.
3. Prepare T4A slips. Ensure you are set up to issue T4A slips with box 048 properly completed for fees for services.
4. Understand PSB rules. If your incorporated contractors are actually functioning as employees, they may be classified as Personal Service Businesses, which have different tax treatment and lose access to the small business deduction.
5. Document your relationships. Keep clear records showing why workers are classified as contractors versus employees. The CRA looks at factors like control, ownership of tools, opportunity for profit, and risk of loss.

 

What This Means for Owner-Operators

If you are an owner-operator working in the trucking industry, this affects you, too.

Things to Consider:

• Are you truly independent? If you work exclusively for one company, use their equipment, follow their schedules, and have no opportunity for profit or risk of loss, you may be functioning as an employee even if you are incorporated.
• Are you receiving proper benefits? If you are misclassified as a contractor when you should be an employee, you are missing out on EI, CPP, WCB coverage, and other benefits.
• Is your company reporting properly? Companies that pay you should now be reporting these payments on T4A slips. This increases transparency and ensures both parties are meeting tax obligations.
• PSB classification matters. If the CRA determines your corporation is a Personal Service Business, you will lose access to the small business deduction and face higher tax rates.

 

The Personal Service Business Issue

A significant part of this crackdown involves Personal Service Businesses. Let me explain what this means.

What is a PSB?

A Personal Service Business is a corporation that provides services to another entity, where the individual performing the services would be considered an employee if not for the corporate structure.

Why Companies Push for Incorporation:

Some trucking companies require drivers to incorporate to avoid paying:

• CPP contributions
• EI premiums
• Workers’ compensation premiums
• Other employment-related costs

The Problem:

This arrangement can be illegal if the driver is actually functioning as an employee. The CRA has been clear that you cannot use incorporation to avoid employment obligations.

PSB Tax Consequences:

If your corporation is deemed a PSB:

• You lose the small business deduction
• Corporate income is taxed at the highest rate (around 44%)
• You can only deduct salary paid to the incorporated individual and certain limited expenses
• You cannot claim most business deductions available to other corporations

 

Why This Matters Now

The CRA’s announcement states that these updated reporting requirements will help improve transparency, strengthen compliance, and ensure both payers and workers are meeting their tax obligations, while supporting fair working conditions and safer roads for all Canadians.

This builds on strategic investments announced in Budget 2025, which enhance the CRA’s capacity to address non-compliance in the trucking industry. Translation: the CRA is investing resources specifically to audit and enforce compliance in this sector.

The CRA will publish further guidance in the coming weeks to help businesses determine whether they are affected and understand how to meet their reporting obligations. I will monitor for updates and share relevant information as it becomes available.

 

What You Should Do Right Now

If you operate in the trucking industry or work with trucking companies, take action now:

For Trucking Companies:

1. Review worker classifications. Are your drivers properly classified as employees or independent contractors?
2. Set up T4A reporting. Ensure your payroll system can properly report fees for services in box 048.
3. Train your accounting staff. Make sure everyone understands the new reporting requirements and deadlines.
4. Audit past arrangements. Review how you have classified workers in previous years. If there are issues, it may be better to address them proactively than wait for a CRA audit.
5. Seek professional advice. This is complex tax law. Work with a bookkeeper or accountant experienced in trucking industry compliance.

For Owner-Operators:

1. Understand your classification. Are you truly an independent contractor or are you functioning as an employee?
2. Review your contracts. What do your agreements with trucking companies actually say about your relationship?
3. Track your independence. Document how you operate independently: multiple clients, your own equipment, ability to hire helpers, opportunity for profit.
4. Understand PSB rules. Know the tax consequences if your corporation is deemed a PSB.
5. Get professional guidance. Do not navigate this alone. The stakes are too high.

 

Key Takeaways

✓ The CRA has ended the penalty moratorium for trucking industry reporting failures effective 2025
✓ Payments over $500 to incorporated trucking contractors must be reported on T4A slips (box 048) by February 28, 2026
✓ The CRA is cracking down on PSBs and the misclassification of employees as contractors
✓ Companies forcing employees to incorporate to avoid payroll taxes will face increased scrutiny
✓ Both trucking companies and owner-operators need to review their arrangements now
✓ More guidance is coming from the CRA in the coming weeks
✓ Penalties will be assessed for non-compliance starting with the 2025 tax year

 

Need Help with Trucking Industry Compliance?

These new CRA requirements are complex, and the consequences of getting them wrong are significant. If you operate a trucking company or work as an owner-operator in Chilliwack, the Fraser Valley, or anywhere in British Columbia, I can help you:

• Review your current worker classifications
• Determine if drivers should be employees or contractors
• Understand PSB rules and tax implications
• Set up proper T4A reporting systems
• Prepare for potential CRA audits
• Ensure full compliance with new requirements

I have over 30 years of experience supporting businesses through tax compliance challenges. I work with construction, transportation, and service industry clients who face these same worker classification issues.

Contact SBSC Ventures today for a free consultation. Let me help you navigate these changes so you can focus on running your trucking business with confidence.

Disclaimer: This blog post provides general information about CRA announcements and requirements. It is not intended as legal or tax advice. Every business situation is unique. Please consult with a qualified tax professional about your specific circumstances.