At Fulcrum Group, we’re assisting trucking clients navigate the Canada Revenue Agency’s (CRA) major announcement: the moratorium on T4A penalties for “fees for services” reporting has been lifted, effective for the 2025 tax year. This targets non-compliance in the “Driver Inc.” model, where incorporated drivers’ relationship with their client resembles an employee relationship, but the driver incorporates to reduce payroll taxes and benefits expenses. As your local small accounting firm, we’ll guide you through compliance to avoid penalties.
Risks
- Payors: T4A filing penalties of $100/slip + $30/day (up to $7,500/return) for missing 2025 reports, plus possible retroactive payroll taxes, EI premiums, and WSIB penalties if incorporated drivers are reclassified as employees.
- Payees (Driver Inc. CCPCs) risk PSB (personal services business) audits disallowing corporate deductions, forcing personal income taxation at higher rates, plus denied EI/pensions/benefits from misclassification—exacerbated by CRA’s focused trucking enforcement program starting 2026.
Who Is Affected?
- Trucking businesses: Any payer (carrier or fleet operator) where more than 50% of primary income comes from trucking activities.
- Payees: Canadian-controlled private corporations (CCPCs) in trucking receiving payments for services. Often “Driver Inc.” entities set up by owner-operators.
- Scope: Payments exceeding $500 in a calendar year for services (excluding GST/HST) for each payee, each year.
This aims to restore fairness and ensure compliance in the industry.
When It Applies and to Whom
The change applies starting with the 2025 tax year (January 1–December 31, 2025) and all future years. No grace period remains. It specifically requires reporting payments made to other trucking corporations for services like hauling or subcontracting.
Backed by Budget 2025’s $77M CRA funding for audits, expect increased scrutiny.
Key Deadlines
- Review payments: compile 2025 records of payments to incorporated drivers/subcontractors.
- File with CRA: By February 28, 2026 (or postmarked March 2, 2026, as Feb 28 is a Saturday). Use box 048: Fees for services on the T4A slip via My Business Account or payroll software.
- Issue T4A slips to recipients: By February 28, 2026 (or postmarked March 2, 2026, as Feb 28 is a Saturday) for each individual payee over the $500 payment threshold.
- Penalties: Immediate for late/missing filings.
Action Steps to Implement Reporting
- Identify affected payments: Scan ledgers for 2025 service payments >$500 to CCPCs in trucking. (Use vendor details to confirm CCPC status and industry).
- CCPC status and industry could be confirmed by requesting the articles of incorporation or by using CRA’s business number look-up tool.
- Gather recipient info: Obtain recipient’s name, address, social insurance number (individual) or business number (corporation), and net payment totals (no GST/HST).
- Accounting software features can be used to automate tracking and flagging of relevant payments.
- Prepare T4As: Use CRA’s online portal or our services. Note that electronic filing in mandatory for businesses with more than 5 slips.
- Distribute and file: Send copies to recipients and file with CRA by Feb 28/Mar 2.
- Document everything: Keep records for 6 years to defend audits.
Fulcrum Group can handle this end-to-end, including gathering the information and filing, for a smooth year-end close.
Staying Compliant in the Future
- Track annually: If possible, set up vendor flags in accounting software for trucking CCPCs; automate thresholds.
- Review contracts: Classify drivers properly. Consider payroll reclassification to avoid PSB audits.
- Training staff: Regular training for staff members on T4A requirements and ongoing review of vendor contracts to ensure proper classification.
- Await CRA guidance: Expected soon; we will keep clients updated as new information becomes available.
- Proactive planning: Monitor Budget 2026 updates and optimize taxes/safety compliance.
Follow the link below for more information regarding compliance in the trucking industry:
Contact Fulcrum Group today for a trucking compliance review and ensure your business is prepared for the new T4A requirements.