Driver Inc. and PSB Income: What Incorporated Truck Drivers Should Know
By Ravi’s Accurate Tax Services | Updated October 8, 2026
Being paid through a corporation does not automatically make a truck driver’s income eligible for ordinary small-business tax treatment. Review the actual working arrangement before relying on a low corporate tax rate or claiming business expenses.
What is a personal services business?
Generally, PSB rules can apply when an individual provides services through their corporation and would reasonably be an employee of the customer without that corporation, subject to the other statutory conditions and exceptions. Not every incorporated driver is a PSB.
Look beyond the contract label
Relevant facts include who controls the work, who supplies the truck and equipment, whether the driver can hire a replacement, and the opportunity for profit or risk of loss. Owning a corporation, issuing invoices or signing a contractor agreement does not settle the matter. Consider the whole relationship.
Why classification matters
PSB income is not eligible for the small business deduction or general corporate tax rate reduction. It is subject to an additional 5% federal tax, and deductible expenses are restricted. Do not assume every fuel, meal, travel or vehicle cost is deductible under PSB rules. Provincial corporate tax also applies.
Salary and filing obligations
Salary and wages paid to the incorporated employee are among the permitted expense categories, subject to the applicable rules. Payroll obligations may arise when the corporation pays remuneration. Corporate tax filing and any GST/HST responsibilities must also be reviewed. A dividend does not provide the same corporate deduction as salary.
What to bring for a review
Bring service agreements, invoices, truck ownership or lease documents, expense records, details of dispatch and scheduling, replacement-driver arrangements, corporate year-end information and payroll records. A review should happen before year-end so payment and reporting decisions can be considered in time.
Call Ravi’s Accurate Tax Services at 647-300-1516 or 905-798-3785. Serving Canada except Quebec.
CRA sources:
General information; PSB classification requires a review of your specific facts.
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