Canadian trucking groups sound alarm over ‘tax scam,’ call on CRA to step in

0
159
Canadian trucking groups sound alarm over 'tax scam,' call on CRA to step in

Posted May 16, 2023 6:59 PM ET

Updated May 16, 2023 7:26 PM ET

Canadian Trucking Alliance President Stephen Laskowski speaks during a press conference declaring a crisis in Canada’s trucking sector on Tuesday, May 16, 2023 on Parliament Hill in Ottawa. THE CANADIAN PRESS/Spencer Colby

Several groups representing Canadian truckers are calling on the Canada Revenue Agency (CRA) to help end what they describe as “tax fraud” that is affecting their industry and has been going on for years, but that has reached the level of a “crisis”.

The groups said at a news conference Tuesday they want to see an end to Driver Inc. Model they describe as “employee tax evasion and misclassification fraud” and “tax system-sponsored labor abuse.”

According to the Canadian Trucking Alliance (CTA), the “Driver Inc.” This model consists of a trucking company requiring its drivers to register as a company “in order to sell their driving services to the trucking company.”

“What distinguishes these individuals from ‘owner-operators’ is that they do not own, lease or operate a vehicle. Instead, they drive the carrier’s vehicles and are virtually indistinguishable from an “employee,” the CTA said.

The organization says the practice allows truckers and drivers to avoid certain tax obligations. However, because these drivers are not recognized as employees, this means that the industry finds it difficult to access employment insurance, overtime and vacation pay, severance pay, sick days, and medical and dental benefits for drivers.

The group raising concerns — made up of Teamsters Canada, the Canadian Trucking Alliance (CTA) and the Association du Camionnage du Québec (ACQ) — also believe this practice allows truckers and truckers to avoid paying taxes of $1 billion a year to avoid.

“At its simplest, Driver Inc. is a practice of misclassifying company-owned equipment drivers as independent contractors in order to sell their driving services back to that carrier,” said John McCann, national director of freight and tank haulage at Teamsters Canada . “By doing so, these carriers can lower their operating costs and dramatically undercut industry rates by avoiding paying mandatory employee-related service deductions.”

McCann said another key issue is that the practice gives some airlines an unfair advantage over others, calling it “an abuse of vulnerable workers”.

They are asking the CRA to investigate the carriers and take enforcement action for those using Driver Inc.’s practice.

CTVNews.ca has asked the CRA if it is making any changes to curb the practice, but has yet to receive a response.

Mariam Abou-Dib, executive director of Teamsters Canada, said that while both the Labor and Transportation departments have been responsive to the truck industry’s concerns about Driver Inc., CRA is a “missing partner” to make more substantive changes to do.

Stephen Laskowski, President of the CTA, said there are many drivers who are willing to engage in the practice, while other drivers lack an understanding of the larger implications for the industry.

“Even so, enforcement needs to happen,” he said. “This is a crisis.

RELATED PICTURES

Canadian Trucking Alliance President Stephen Laskowski speaks during a press conference declaring a crisis in Canada’s trucking sector on Tuesday, May 16, 2023 on Parliament Hill in Ottawa. THE CANADIAN PRESS/Spencer Colby