Reporting fees for service transactions in the trucking industry

Transcript - Reporting fees for service transactions in the trucking industry

Hello and welcome to reporting fees for service transactions in the trucking industry. I’m Anthony, your host for today’s webinar.

 Let’s begin by acknowledging that the land on which I am located is the traditional unceded territory of the Algonquin Anishinaabeg People. The Algonquin peoples have lived on this land since time immemorial. We are grateful to have the opportunity to be present in this territory. Given that we are meeting virtually, I also want to acknowledge the lands on which you are gathered from coast to coast and invite you to take a moment to acknowledge the territory in which you find yourself.

 This webinar will be of interest to you if: You are a business entity operating in the trucking industry or You provide tax guidance to businesses operating in the trucking industry.

For today, please click on the question icon in the tool bar at the top of the screen to ask a question related to reporting fees for service transactions in the trucking industry. We’ll answer as many as we can during the webinar. We keep all questions, answered and unanswered, to develop new webinar content. For any other tax related questions, call the business enquiries line. 

Let’s get started. 

Today, we’ll talk about:

• What the reporting fees for service requirement is
• Complying with the reporting fees for service requirement in the trucking industry
• Reporting payments of fees for services on the T4A slip and T4A summary
• Tax obligations for personal services businesses who operate and provide services in the trucking industry

Let's start with the basics.

Under the Income Tax Act, any business that pays another business to provide services must report those payments to the CRA if the total of all payments exceeds $500 in the calendar year. The payments are reported using box 048, Fees for services, on the T4A slip.

 The business that pays for the services is known as the payer, while the business that provides the services to another business is known as the payee. 

This information helps the CRA verify income and expenses reported by businesses, ensuring everyone is paying their fair share of taxes.

In 2011, a moratorium on assessing penalties for failing to complete box 048, Fees for services, on the T4A slip was introduced. This was meant to allow businesses and organizations time to gain familiarity with the requirement and adopt practices to comply.

In December 2025, the CRA announced the lifting of the moratorium on penalties for the trucking industry, starting with the 2025 tax year. The moratorium remains in place for all other industries.

This means if you are a trucking business and you have paid more than $500 in fees for services in a calendar year to a Canadian-controlled private corporation operating in the trucking industry, you need to report those payments to the CRA. If you do not, you will be subject to penalties. 

 The CRA considers a business to be operating in the trucking industry if its primary source of income is from trucking activities. Primary source of income is defined as representing more than 50% of a business’s income-earning activities. This applies to both the business paying for the services, the payer, and the Canadian-controlled private corporation receiving the payments, the payee.

If a business earns income from multiple different activities including trucking activities, but its trucking activities are not its primary source of income, then that business is not considered to be operating in the trucking industry. Even though the business is not considered to be operating in the trucking industry, the business is still required to report payments of fees for services exceeding $500 in a calendar year on a T4A slip.

A Canadian-controlled private corporation2 is a private corporation that meets specific conditions under the Income Tax Act. In simple terms, it’s a corporation that is a resident in Canada and controlled by Canadian residents, rather than foreign entities or public corporations.

Now why does this matter?

If you are a business in the trucking industry, you will be subject to penalties if you do not report payments of fees for service exceeding $500 that you paid to a Canadian-controlled private corporation operating in the trucking industry. 

To determine if the corporation that you paid fees for services to is a Canadian-controlled private corporation, you can request that the business confirm their corporation type.

While the moratorium on the assessment of penalties for failure to report fees for services remains in place for businesses and organizations outside of the trucking industry, in all cases where you are paying fees for services, you are required to issue a T4A slip to the recipient. Doing so will ensure you avoid penalties even if you cannot confirm if the recipient is a Canadian-controlled private corporation. 

There are applicable trucking activities and non-applicable transportation activities when it comes to determining if your business or Canadian-controlled private corporation is operating in the trucking industry for the purposes of assessing penalties for failure to report payments of fees for services.

Applicable trucking activities include: 

• Local and long-distance truck transportation of goods, both general and specialized freight
• Freight transportation arrangements for trucking refers to businesses that act as intermediaries between shippers and carriers. These can include:
  • brokers with or without assets and
  • staffing agencies.

The lift of the moratorium on assessing penalties for failure to report fees for service in the trucking industry does not apply to transportation activities such as air, water, or rail, nor does it include the transportation of passengers, postal service, couriers and messengers, or support activities for transportation, with the exception of the arrangement of freight transportation for trucking. 

To meet the reporting fees for service requirement, businesses must report the total payments of fees for services exceeding $500 in a calendar year in box 048 of the T4A slip, along with the Canadian-controlled private corporation’s business number in box 013.

Any trucking business which is a corporation should have a business number, as they are required to file T2 corporation income tax returns . For the purposes of issuing a T4A slip, the Canadian-controlled private corporation should provide this number to your business. If it does not, your business must demonstrate to the CRA that you have made a reasonable effort to try and obtain it. 

For 2025 and later calendar years, if your business operates in the trucking industry, you will be assessed penalties if you do not report payments of fees for services you make to a Canadian-controlled private corporation also in the trucking industry in box 048 of a T4A slip. 

In addition to completing and issuing a T4A slip, your business is also required to include the total amounts from all T4A slips in your T4A summary. The T4A summary represents the total of the information reported on all of the T4A slips that a business issues in the calendar year. 

Then, by the last day of February of the following calendar year, your business must issue the completed T4A slip to the Canadian-controlled p rivate corporation providing the services, and send the completed T4A slip, and any other T4A slips you have to file for that year, along with your completed T4A summary to the CRA.

If this deadline falls on a Saturday, Sunday, or public ho liday recognized by the CRA, your completed T4A slips and T4A summary will be considered to be received on time if they are postmarked on or before the next business day. For example, in the year 2026, the last day of February falls on a Saturday. This means that your completed T4A slips and T4A Summary for the 2025 tax year will be considered to be received on time by the CRA if they are postmarked on or before Monday, March 2, 2026

Let’s review an example of a trucking business that is not complying with the reporting fees for service requirement in the trucking industry. In this example, 123 Logistics, which specializes in transporting roofing materials and earns 70% of its income from trucking activities, hired Rapid Haul Freight Services, a Canadian-controlled private corporation whose primary source of income is also from trucking activities, to transport these materials via several long-haul routes throughout 2025. 

123 Logistics: paid Rapid Haul Freight Services $75,000 for its services; and claimed this payment as a sub-contractor expense on its T2 corporation income tax return for the 2025 tax year.

123 Logistics was selected for an audit. During the CRA’s review, it determined that the $75,000 was a payment of fees for services, but T4A slips reporting this amount were not provided by 123 Logistics to Rapid Haul Freight Services and the CRA. Because both 123 Logistics’ and Rapid Haul Freight Services’ primary sources of income are from trucking activities, the lift of the moratorium on penalties for failure to report payments of fees for services applies to 123 Logistics. The CRA subsequently applies a penalty for failure to file the T4A slip. 

 Next, let’s look at an example of how this reporting requirement applies to freight brokering and a delivery chain in the trucking industry. In this example, all three businesses earn more than 50% of their income from trucking activities, and the total payments of fees for services received by each from the other trucking business exceeded $500 in the calendar year.

ABC Freight Ltd.:

• Operates as a broker in the trucking industry and does not own any trucks.
• It receives a contract from a client to coordinate the delivery of merchandise. This client’s primary source of income is not from trucking activities.
• ABC Freight Ltd contracts Elite Services Inc., another broker and Canadian-controlled private corporation, to coordinate the transportation of the merchandise under that contract.

Elite Services Inc.:

• Is a Canadian-controlled private corporation that contracts with ABC Freight Ltd.
• Elite Services Inc engages 123 Transportation Inc., another Canadian-controlled private corporation, to deliver the merchandise.

The lift of the moratorium on penalties for failure to report fees for services in the trucking industry applies to both ABC Freight Ltd. and Elite Services Inc. in this example. Therefore, they must both issue completed T4A slips for their payments of fees for services in the calendar year. Both ABC Freight Ltd. and Elite Services Inc. must also include these payments as part of the total amount they include in their T4A summaries for the calendar year, and send them, along with the completed T4A slips, to the CRA before the end of February of the following calendar year. 

In this case, ABC Freight Ltd. and Elite Services Inc. are complying with the reporting fees for service requirement, therefore penalties will not apply.

Now let’s look at an example with a staffing agency. Here, all three parties earn more than 50% of their income from trucking activities, and the total payments of fees for services between each party exceeds $500 in the calendar year.

Moonlight Express is a federally regulated trucking company in Ontario with 100 trucks. It employs 50 drivers on its payroll and uses ABC Staffing Services Inc., a provincially regulated, Canadian-controlled private corporation and driver recruitment agency, to contract 50 additional drivers to drive the remaining trucks. 

The contracts are all made with the drivers’ corporations rather than with the drivers themselves. Each of their corporations is a Canadian-controlled private corporation. None of these drivers or their corporations own their own trucks. They operate Moonlight Express trucks and haul freight for Moonlight Express customers. 

Moonlight Express pays ABC Staffing Services Inc. $1,000 per month for arranging and coordinating trucking services totaling $12,000 annually. ABC Staffing Services Inc. in turn pays the drivers’ corporations for the trucking services provided.

The lift of the moratorium on penalties for failure to report fees for service in the trucking industry applies to both Moonlight Express and ABC Staffing Services Inc. in this example. Moonlight Express reports the $12,000 paid in box 048 of the T4A slip and issues it to ABC Staffing Services Inc. ABC Staffing Services, in turn, issues T4A slips to each driver’s corporation for the amounts paid for their trucking services. Both Moonlight Express and ABC Staffing Services Inc. provide copies of the T4A slips, along with their completed T4A summaries, to the CRA before the end of February of the following calendar year.

In this case, Moonlight Express and ABC Staffing Services Inc. are complying with the reporting fees for service requirement, and will not be subject to penalties.

It’s important to remember that all businesses are responsible for knowing their tax obligations. All businesses are required to issue T4As for all fees for services paid. The lift of the moratorium only applies if the payee is a Canadian-controlled private corporation
in the trucking industry.

To help you meet the reporting fees for service requirement if you’re a trucking business, you should keep accurate records of all contracts, invoices, and payments made. Make sure you report payments of fees for service on the T4A slip for the year in which it is paid, regardless of when it was earned, and issue it to the payee whether or not they are a Canadian-controlled private corporation. 

You will need to open a payroll account with the CRA, if you don’t already have one, and submit the completed T4A slips along with your T4A summary by the last day of February of the following calendar year. Review your processes now so you can meet the reporting deadline and avoid penalties.

 A personal services business exists when a worker incorporates and is contracted to provide services to another business through the corporation, and where the worker performing the services would reasonably be considered an employee of the hiring business if the corporation did not exist.

You can refer to Canada.ca/personal-services-business for guidance on determining if your corporation is carrying on a personal services business.

 Corporations carrying on personal services businesses have different tax obligations compared to other corporations. They are not eligible for the general tax rate reduction or the small business deduction. They are subject to the full federal and provincial corporate tax rates, plus an additional 5% tax on personal services business income. And they cannot deduct most business expenses.

If you’re a worker in the trucking industry, you can choose to provide your services through a corporation, but you must understand and meet your specific tax obligations.

 The reporting fees for service requirement ensures that transactions between corporations carrying on personal services businesses and the businesses that contract them are reported.

As a corporation carrying on a personal services business, you should receive a T4A slip for the services your corporation provides to another business. This ensures you can accurately report the income you have earned throughout the year.

If your corporation is carrying on a personal services business, remember to keep detailed records of contracts, invoices and any supporting documentation. Maintaining accurate records will help you meet your reporting obligations and ensures you’re prepared in case of an audit. 

It’s also important that you understand the specific tax rules for personal services businesses. You must include all amounts in box 048 of T4A slips you receive in the calendar year on your T2 corporation income tax returns. This ensures you are accurately reporting your income. Remember to file your return with the CRA by the deadline, even if there is no tax payable.

Let’s take a moment to review what we’ve discussed.

When it comes to the reporting fees for service requirement, all businesses are required to issue T4A slips to report payments of fees for services. 

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

Businesses are considered by the CRA to be operating in the trucking industry if more than 50% of their income-earning activities are from trucking activities. If trucking businesses fail to report payments of fees for service exceeding $500 in a calendar year, they will be subject to penalties.

 Today we talked about: 

• What the reporting fees for service requirement is
• Complying with the reporting fees for service requirement in the trucking industry
• Reporting payments of fees for services on the T4A slip and T4A summary
• Tax obligations for personal services businesses who operate or provide services
  in the trucking industry

Tax administration is as complex as life itself. If the content today doesn’t quite fit your situation, please:

• Visit canada.ca/taxes Visit
• Visit canada.ca/cra-liaison-officer to get free tax help from a liaison officer
• Call the CRA’s business enquiries line at 1-800-959-5525
• Subscribe to a CRA mailing list at Canada.ca/cra-email-lists
• You can also go to canada.ca/cra-videos where you’ll find all our business webinars.

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Please click on the survey icon in the tool bar at the top of the screen to fill out the evaluation form for this webinar. Thanks for joining me today. I hope it’s been helpful. Stay tuned for more webinars in the coming months! Good bye.