Payments for trucking services

If your contract is with the truck driver’s corporation, your withholding and reporting requirements for payments you make to their corporation are different from those you have for payments you make to employees and self-employed workers.

1. Determine if you need to withhold deductions

   You (as the payer of the truck driver’s corporation) are not responsible to withhold the following from amounts you pay their corporation:

   • Income tax (do not withhold), unless the corporation is a non-resident, where you must then withhold at the rate of 15%
   • CPP contributions (do not withhold)
   • EI premiums (do not withhold)

   The truck driver may be an employee of their own corporation. The payroll obligations for the truck driver’s corporation (whether or not the corporation is carrying on a PSB) are the same as those that apply to regular employers.

   The truck driver’s corporation is responsible to withhold deductions from amounts paid to its employees and report the amounts on a T4 slip.

2. Determine if the payment made is for a good or for a service

   If you paid for a service that involves the provision of goods, you may need to determine its characterization as a good or as a service.

   The terms goods and services are not defined in the Income Tax Act (ITA) for the purpose of reporting the payment of fees for service. The terms should be understood in their ordinary meaning and the meaning used by the courts.

   Guidance indicating if the payment is for a good or for a service

   You may use the following guidance, based on the ordinary and legal meanings of the terms goods and services, to help you if you are not sure if the payment is for a good or for a service:

   • Option 1: Generally, payment for a good is an amount paid for:

     • Tangible and movable property (for example: clothing, office equipment, machinery, tools, supplies)
     • Merchandise manufactured or produced for sale
     • Articles of trade and commerce

   • Option 2: Generally, payment for a service is an amount paid for:

     • The actions of serving, helping or benefitting another (for example: legal advice, house cleaning, consulting services)
     • The physical or intellectual work itself, not the article of trade or commerce or tangible finished product produced by that work

   Whether an amount paid is for a good or for a service is a question of fact that can only be determined after a review of all of the relevant facts and circumstances.

   If you are not sure if the payment is for a good or for a service, you can contact the CRA.

   Example - Payment made for services only

   Your corporation contracts another business to only provide driving, loading, and unloading services in the trucking industry.

   In this example, you would report on a T4A slip the payment made to another business for the provision of services.

   Example - Payment made for services and goods

   Your corporation contracts another business to provide driving, loading, and unloading services in the trucking industry, as well as to do repairs on your corporation’s vehicles. As part of their invoice, they bill your corporation for parts used in these repairs.

   In this example, you would:

   •  Not report on a T4A slip the portion of the payment that relates to the provision of goods
   • Report on a T4A slip the portion of the payment that relates to the provision of services of driving, loading, unloading and the labour component of repairing vehicles
   •  If you make a payment related to only the provision of goods, do not continue to the next step.
   • If you make a payment related to both goods and services, you must report the portion of the payment that relates to the provision of services, continue to Step 3 - Report the payments on a T4A slip.

3. Report the payments on a slip

   You must report payments on a T4A or T4A-NR slip depending on the residency status of the truck driver's corporation:

   1. • Canadian resident corporation - T4A slip

        If the payment is made to a Canadian resident corporation, you must report the portion of the payment that relates to the provision of services on a T4A slip:

        • Box 048 – Fees for services

        Learn more: T4A slip - Information for payers

      • Non-resident corporation - T4A-NR slip

        If the payment is made to a non-resident corporation, you must report the portion of the payment that relates to the provision of services on a T4A-NR slip:

        • Box 18 - Gross amount

        Learn more: T4A-NR slip - Payments to non-residents for services provided in Canada

   2. Determine if penalties apply if you do not report the payments on a T4A slip

      New CRA administrative policy For 2025 and later calendar years, if you are a business operating in the trucking industry, you can be assessed penalties if you do not report the payments you make in box 048 of a T4A slip if all of the following apply:

      • Your primary source of business income  is from trucking activities
      • Payments of fees for services were made to a Canadian controlled private corporation (CCPC)  whose primary source of business income is from trucking activities (this does not apply to non-CCPC corporations, partnerships or self-employed workers)
      • Payments of fees for services were made for services performed inside or outside Canada
      • The total of all payments of fees for services in the calendar year to a particular business were more than $500 (do not include GST/HST)

      If the truck driver providing the services through their own corporation also performs services as an employee of your business in addition to the services they provide through their corporation, you must report the payments on both:

      • A T4 slip to report employment income
      • A T4A slip to report fees for services paid to the corporation

      Determine if the business you paid is a CCPC

      To determine if the corporation that you paid fees for services to is a CCPC, 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 CCPC.

      What is considered the primary source of business income

      If more than 50% of a business’s income-earning activities (gross business revenue) are trucking activities, the primary source of business income is considered to be trucking.

      In many cases, businesses may perform significant amounts of trucking or related activities, but this is not their primary source of business income.

      Trucking activities where the new CRA administrative policy applies and does not apply

      • List of applicable trucking activities (local or long distance)

        • Carriers (cartage, interlining)
        • General freight trucking
          • Consumer goods (food, beverages, clothing)
          • Furniture
          • Lumber
          • Machine parts
          • Plants
          • Raw materials
          • Refrigerated goods
          • Roofing materials
          • Windows
        • Specialized freight trucking
          • Construction materials
          • Hazardous materials
          • Heavy machinery
          • Oversized items
          • Transportation of livestock
          • Used household and office goods moving (excluding storing, securing, packing and unpacking)
        • Freight transportation arrangement for trucking (establishments primarily engaged in acting as intermediaries (brokers) between shippers and carriers)
          • Intermediaries and brokers
          • Staffing agencies

      • List of non-applicable transportation activities (local and long distance)

        • Air transportation
        • Rail transportation
        • Water transportation
        • Transit and ground passenger transportation
          • Charter bus transportation
          • School and employee bus transportation
          • Taxi and limousine services
          • Urban transit systems
        • Pipeline transportation
        • Scenic and sightseeing transportation
        • Support activities for transportation (excluding freight transportation arrangement for trucking)
        • Postal service
        • Couriers and messengers
        • Warehousing and storage
          • Storing and securing goods
          • Packing and unpacking
          • Logistics services relating to the distribution of goods

      Examples of situations where the new CRA administrative policy applies and does not apply

      Example 1

      • Description

        123 Distribution Co., a company who distributes packaged food products across Canada and whose primary source of business income is more than 50% from trucking activities, contracts ABC Haulage Inc., a CCPC in the trucking industry, to transport shipments from its Ontario warehouse to retail markets. ABC Haulage's primary source of business income is also more than 50% from trucking activities. 123 Distribution Co. paid a combined total of $8,000 to ABC Haulage Inc. for trucking services provided during July and August.

      • Result

        • 123 Distribution Co. must report the payments made to ABC Haulage Inc. on a T4A slip using box 048. It must provide the T4A slip to ABC Haulage Inc. by the last day of February of the following calendar year to which the slip applies. It must also include this amount when it completes the T4A Summary. Finally, 123 Distribution Co. must send both the T4A slips and the T4A Summary to the CRA by the last day of February of the following calendar year.
        • 123 Distribution Co. and ABC Haulage Inc.’s primary source of business income for the CCPC are more than 50% from trucking services.
        • New CRA administrative policy Penalties apply if the fees paid for trucking services are not reported in box 048 of a T4A slip.

      Example 2

      • Description

        In October, Heavy Duty Moving Ltd., which specializes in transporting industrial machinery and earns 90% of its income from trucking activities, contracts three CCPCs in the trucking industry to assist with moving oversized generators within Ontario, paying each CCPC $50,000 for services provided in October and November. The primary source of business income for each of the three CCPCs is also more than 50% from trucking activities.

      • Result

        • Heavy Duty Moving Ltd. must report the payments on three separate T4A slips using box 048, one for each CCPC. It must provide the T4A slip to each CCPC by the last day of February of the following calendar year to which the slips apply. It must also include this amount when it completes the T4A Summary. Finally, Heavy Duty Moving Ltd. must send both the T4A slips and the T4A Summary to the CRA by the last day of February of the following calendar year.
        • Heavy Duty Moving Ltd. and each of the three CCPC’s primary source of business income for are more than 50% from trucking services.
        • New CRA administrative policy Penalties apply if the fees paid for trucking services are not reported in box 048 of a T4A slip.

      Example 3

      • Description

        This example outlines the use of an intermediary (broker). Intermediaries are primarily engaged in arranging and coordinating the transportation and storage of goods between a shipper and a carrier without themselves providing actual transportation and storage services.

        LMN Carrier Brokerage Ltd., a freight brokerage that earns 90% of its income arranging freight transportation via truck transportation, is contracted by XYZ Furniture Co., a company whose primary business activity is furniture production, to arrange and coordinate the delivery of freight from Vancouver to Calgary. XYZ Furniture Co. pays $2,500 to LMN Carrier Brokerage Ltd. for its services. LMN Carrier Brokerage Ltd. in turn contracts Haulage Inc., a CCPC that earns most of its income from trucking activities, to make the delivery via truck for a payment of $2,100.

      • Results for each payer:

        • XYZ Furniture Co.
        • As XYZ Furniture Co.'s primary business activity is furniture production and not trucking activities, its activities do not fall under the applicable activities associated with the lift of the moratorium on penalties for failure to report fees for service in the trucking industry.
        • XYZ Furniture Co. is still required to report the fees it paid to LMN Carrier Brokerage Ltd. in box 048 of the T4A slip, even though its primary source of income is not from trucking activities, and it must provide the completed T4A slip to LMN Carrier Brokerage Ltd. by the last day of February of the following calendar year to which the slips apply.
        • XYZ Furniture Co. must also include this amount when it completes its T4A Summary. It must send both the completed T4A slips and the T4A Summary to the CRA by the last day of February of the following calendar year.
        • New CRA administrative policy does not apply: Reporting these payments of fees for services using box 048 of a T4A slip is mandatory. The CRA is not currently assesssing penalties if the fees paid for trucking services are not reported on a T4A slip if the new administrative policy does not apply.
        • LMN Carrier Brokerage Ltd.
        • Because both LMN Carrier Brokerage Ltd. and Haulage Inc.’s primary sources of income are from trucking activities and the payment made to Haulage Inc. exceeds $500 in the calendar year, LMN Carrier Brokerage Ltd. must complete a T4A slip and report $2,100 in box 048, Fees for services.
        • LMN Carrier Brokerage Ltd. must provide the completed T4A slip to Haulage Inc. by the last day of February of the following calendar year to which the slip applies, and must include this amount in its T4A Summary.
        • LMN Carrier Brokerage Ltd. must send both the completed T4A slip and the T4A Summary to the CRA by the last day of February of the following calendar year.
        • New CRA administrative policy Penalties apply if the fees paid for trucking services are not reported in box 048 of a T4A slip.

      Example 4

      • Description

        In August, Speedy Z, a courier service with 95% of its income earned from parcel delivery and messenger services, hired Quick Shipping Inc., a CCPC in the trucking industry, to transport office supplies between its distribution centers. Speedy Z made payments totaling $6,000 for services provided in August.

      • Result

        • Speedy Z must report the payments made to Quick Shipping Inc. on a T4A slip using box 048. It must provide the T4A slip to Quick Shipping Inc. by the last day of February of the following calendar year to which the slip applies. It must also include this amount when it completes the T4A Summary. Finally, Speedy Z must send both the T4A slips and the T4A Summary to the CRA by the last day of February of the following calendar year.
        • Speedy Z’s primary source of business income is not from trucking activities, it is from courier services.
        • New CRA administrative policy does not apply: Reporting these payments of fees for services using box 048 of a T4A slip is mandatory. The CRA is not currently assesssing penalties if the fees paid for trucking services are not reported on a T4A slip if the new administrative policy does not apply.

      Example 5

      • Description

        In September, Fruits & Vegetables Ltd., a frozen goods warehousing facility that earns its income primarily from storing temperature-controlled goods, hires ABC Freez Inc., a CCPC in the trucking industry, to transport its frozen products from the warehouse to multiple retail locations. Fruits & Vegetables Ltd. made a total payment of $12,000 to ABC Freez Inc. for transportation services it provided in September and October.

      • Result

        • Fruits & Vegetables Ltd. must report the payments made to ABC Freez Inc. on a T4A slip using box 048. It must provide the T4A slip to ABC Freez Inc. by the last day of February of the following calendar year to which the slip applies. It must also include this amount when it completes the T4A Summary. Finally, Fruits & Vegetables Ltd. must send both the T4A slips and the T4A Summary to the CRA by the last day of February of the following calendar year.
        • Fruits and Vegetables Ltd.'s primary source of business income is not from trucking activities, it is from temperature-controlled goods.
        • New CRA administrative policy does not apply: Reporting these payments of fees for services using box 048 of a T4A slip is mandatory. The CRA is not currently applying penalties if the fees paid for trucking services are not reported on a T4A slip if the new administrative policy does not apply.

1. Determine if the truck driver is an employee or self-employed

   If your contract is with the truck driver directly, the truck driver can either be:

   • An employee (employer-employee relationship)

   • A self-employed worker (business relationship)

   A truck driver may also be placed in employment by a placement or employment agency .

    What if you are not sure if the truck driver is an employee or self-employed for CPP/EI purposes

   It is important to determine if a worker is an employee or a self-employed. Employment status has direct impacts on your reporting and withholding requirements for the worker under the Canada Pension Plan (CPP), Employment Insurance Act (EIA) and the Income Tax Act (ITA).

   You need to consider multiple facts to determine if the truck driver is an employee or is self-employed. You can use the CRA guidance to help you gather the facts based on your situation.

   Learn more:

   • Employee or Self-employed
   • CPP/EI explained: Truck drivers

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   • If the employee has been placed in employment by a placement or employment agency, do not continue to the next step.

     Refer to: Payments to workers of placement and employment agencies

   • If the employee was not placed in employment by a placement or employment agency, continue to: Step 2 - Determine which deductions you need to withhold.

2. Determine which deductions you need to withhold

   Depending on the truck driver’s employment status, you must withhold the following deductions from amounts paid to the truck driver for their services:

   • Employee

     • Income tax
     • CPP contributions
     • EI premiums

   • Canadian resident: Self-employed truck driver

     • Income tax (do not withhold)
     • CPP contributions (do not withhold)
     • EI premiums (do not withhold)

     A self-employed truck driver is responsible for remitting income tax and CPP contributions in the same way as other self-employed individuals.

   • Non-resident: Self-employed truck driver providing services in Canada

     • Income tax at the rate of 15%
     • CPP contributions (do not withhold)
     • EI premiums (do not withhold)

   Learn more: How to calculate - Calculate payroll deductions and contributions

3. Report the payment on a slip

   You must report payments on a T4, T4A slip or T4A-NR slip depending on the truck driver’s employment status:

   • Employee - T4 slip

     If the payment is made to your employee, you must report the following amounts on a T4 slip:

     • Box 14 - Employment income
     • Box 24 - EI insurable earnings
     • Box 26 - CPP/QPP pensionable earnings

     Learn more: T4 slip - Information for employers

   • Canadian resident: Self-employed truck driver - T4A slip

     If the payment is made to a Canadian resident who is a self-employed truck driver providing services inside or outside Canada, you must report the following amounts on a T4A slip:

     • Box 048 – Fees for services

     Learn more: T4A slip - Information for payers

   • Non-resident: Self-employed truck driver providing services in Canada - T4A-NR slip

     If the payment is made to a non-resident self-employed truck driver providing services in Canada, you must report the following amounts on a T4A-NR slip:

     • Box 18 - Gross amount

     Learn more: T4A-NR slip - Payments to non-residents for services provided in Canada