Removing the T4A moratorium a major move against Driver Inc.

As of December 4, 2025, the Canada Revenue Agency (CRA) has lifted the moratorium on penalties for businesses in the trucking industry that fail to report fees for services on T4A slips for the 2025 tax year and subsequent tax years. Businesses in this 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. 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.

Lifting the T4A penalties moratorium makes it riskier and more costly for companies to hide “driver‑employee” relationships behind inappropriate contractor or incorporated arrangements, which in turn helps expose and reduce employee misclassification in Canada’s trucking sector. By forcing payers to accurately report fees for services on T4A slips and reinstating penalties when they fail to do so, the measure creates better data for enforcement and stronger incentives to classify drivers correctly.

The T4A penalties moratorium

Since 2011, the CRA had a moratorium on penalties for failing to complete box 048 (“fees for services”) on T4A slips, even though the law required many such payments to be reported. In practice, this meant many trucking companies could pay drivers inappropriately classified as contractors or incorporated drivers without consistently issuing T4A slips or facing consequences for non‑reporting, allowing these driver-contractors or incorporated drivers not to be identified by CRA.

What changes when the penalties return

As of the 2025 tax year, trucking businesses that do not report service fees over $500 to Canadian‑controlled private corporations on T4A slips will again face financial penalties. Those payments must be reported in box 048 of the T4A by a fixed deadline (e.g. February 28, 2026, for 2025 payments), which obliges carriers to keep clearer records of who is being paid and on what basis.

How this targets Driver Inc.

The federal government has explicitly framed lifting the moratorium as part of a strategy to crack down on the “Driver Inc.” model, where drivers are misclassified as independent contractors to avoid payroll taxes and employment standards. By ensuring that all non‑employee drivers, including incorporated drivers, once again receive T4A slips, authorities gain a transparent record of these relationships that can be cross‑checked for misclassification risk, including whether incorporated drivers should be classified as a personal services business (PSB).

Enforcement and information‑sharing effects

The 2025 Canadian Budget commits $77 million over four years, plus ongoing annual funding, to support CRA enforcement linked to lifting the T4A moratorium and tackling PSB non‑compliance in trucking. Planned amendments to tax laws will allow CRA to share worker‑classification information with Employment and Social Development Canada, helping labour authorities act more effectively on misclassification cases using improved T4A data.

How this reduces misclassification

When carriers know that unreported or underreported T4A payments can trigger penalties and targeted audits, the financial risks of incorrect reporting shifts toward correctly putting genuine employees on payroll (with T4s, CPP, EI and proper labour protections) rather than using inappropriate contractor structures. Better reporting and enforcement narrow the underground economy, support fair competition for compliant fleets, and make it harder to sustain large‑scale schemes that deny drivers employment rights while presenting them as entrepreneurs on paper.

Immediate effects on trucking companies and drivers

Lifting the T4A penalties moratorium will affect all trucking companies that use contract drivers as well as incorporated drivers. Here are potential scenarios:

1. All trucking companies – Trucking companies who use contract drivers must now file T4A’s before the filing deadline for all such drivers (including drivers contracting through Canadian-controlled private corporations) or expose themselves to penalties if they fail to do so.
2. Some trucking companies – Trucking companies exposed to payroll audits with respect to contractor drivers identified in T4As who are not incorporated may be subject to an assessment of both the employer and employee portions of the CPP and EI withholdings together with a 10% penalty on both the employer and employee portion of CPP, EI and the amount of tax that should have been withheld (but not the tax withholding amount itself) plus interest for up to 4 years.
3. All incorporated drivers – Drivers who are incorporated and identified in T4A’s may be subject to audits to determine whether they should be classified by CRA as a PSB and thus exposed to considerably higher tax rates and the loss of deductibility of most business expenses that would not otherwise be permitted as an employee. We note that drivers involved in the Driver Inc. model likely would have been required to incorporate a corporation and have their new corporation sign a contract with the carrier they were working for to receive payments. The objective with this arrangement was to cause the driver’s corporation to become the employer of the driver and shift the audit risk from the carrier (that simply had a contract for services with a corporate entity that cannot at law be an employee) to the driver’s corporation (that actually employed the individual performing the services).

The MLT Aikins transportation and taxation lawyers can assist trucking companies and drivers with compliance relating to these changes. If you have any concerns regarding past practices that may have been considered Driver Inc., reach out to us for help.

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