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CRA reviews of trucking businesses: what owners should know

Short answer

There are two separate issues. First, if you drive through your own corporation, the CRA may treat it as a personal services business. That restricts expenses and removes the small business deduction. Second, from the 2025 tax year, trucking businesses face penalties for not reporting payments over $500 to incorporated drivers on a T4A slip. Neither means every trucking business has lost its deductions.

Rex Tax Inc. · Information checked against official sources. Last updated October 2, 2026 · Published October 2, 2026

Who this affects

Drivers who provide their services through their own corporation. Trucking companies that pay incorporated drivers. Owner operators who are thinking about incorporating. If you are an employed driver with a T4, the first issue does not apply to you.

One thing most people do not realize

Having one big customer does not, on its own, make your corporation a personal services business. The CRA applies five conditions and decides case by case on how the work is actually done. But if all five are met, the corporation loses the small business deduction and pays an extra 5% tax. It can also lose most of its operating expense claims against that income.

Issue 1: is your corporation a personal services business?

The CRA calls it a PSB. A corporation is a PSB only if all five of these conditions are met:

  1. You provide your services through the corporation.
  2. You, or someone related to you, own at least 10% of the shares.
  3. The corporation has five or fewer full-time employees through the year.
  4. The company paying you is not associated with your corporation.
  5. If the corporation did not exist, you would reasonably be considered an employee of the company you drive for.

The fifth condition is the one that gets argued about. The CRA looks at how the work is actually done. Who controls the schedule? Who owns the truck? Who takes the financial risk? Can you send someone else in your place? Having one customer is part of that picture. It is not, on its own, the answer. The CRA’s own guidance says this is decided case by case.

Why it matters

If the CRA decides the corporation is a PSB, three things change for that income:

  • The corporation cannot claim the small business deduction or the general rate reduction, so the tax rate is higher.
  • The corporation pays an extra 5% tax on that income.
  • The expenses the corporation can deduct are restricted, mainly to salary paid to you and a few employment-type costs. Fuel, repairs and similar operating costs can be disallowed against PSB income.

That is why a classification review can produce a large reassessment. It is different from saying every trucking corporation has lost the right to claim operating expenses. A corporation that is genuinely in business, with its own truck, its own risk and its own customers, is not a PSB.

Issue 2: T4A reporting for payments to incorporated drivers

This is a separate rule. It applies to the company doing the paying.

Say your business mainly does trucking. Say you pay a Canadian-controlled private corporation more than $500 in a calendar year for services. You have to report that payment on a T4A slip, in box 048. The rule itself is not new. What changed is that the CRA had been holding off on penalties for missing it. On December 4, 2025, the CRA announced it would charge those penalties from the 2025 tax year onward. The first slips affected were due at the end of February 2026. The CRA defines a trucking business for this rule as one that gets more than half of its income from trucking.

If you pay incorporated drivers and have not been issuing T4A slips, this is the year to start.

What to prepare

Before an appointment, gather:

  • Your carrier or contractor agreements
  • Truck ownership or lease records
  • Settlement statements for the year
  • Income and expense records, or the bookkeeping file
  • Any CRA correspondence, including the response date shown on it
  • If you pay drivers: a list of who was paid, how much, and whether each one is incorporated

These records are a starting point for understanding the situation. They are not a guarantee of a particular result.

What we can and cannot do

We explain the rules and look at how your business is actually set up. We prepare the returns and slips. We help you prepare a first response to a CRA letter. We do not promise to reverse a reassessment or remove penalties. If a matter needs a tax lawyer, we will say so.

Official sources

Related guides

This guide is general information, not advice about your situation. It reflects the rules for the 2025 and 2026 tax years. Rules described are those in effect from December 4, 2025. It has not yet been reviewed by a practitioner. The information was checked against the official sources listed above on the date shown. Rules change. Check the official sources above or ask us. How we prepare these guides.

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