Use this category to discuss tax topics, whether software-related or not.
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My client drives taxi and received a T-4 showing taxable earning for 2023, and self contributions for employment insurance, no CPP or income tax was deducted. He is required to work a 12 hour shift as per a published schedule each week, using the taxi companies vehicle. He is required to wash and vacuum the vehicle after each shift, and do safety checks before each shift. There is no lunch or supper break provided. He has to travel 32 KM round trip each day to go to the company premises. He is required to provide a cell phone to stay in contact with the dispatcher and other drivers, and dispatches between 5 pm to 10am Monday to Friday, and from 5am to 5am on weekends and stat holidays.
My question is does he file as self employed or as an employee, and can he claim travel, vehicle expense, food expense, taxi license as deductions from his total income.
Appreciate any help.
Bill G
@billgallagher2011
#T4 employee vs #T4A contractor or self employed.
Employees vs Self-Employed
1 - Employees are issued T4 slips with EI, CPP, and income taxes withheld.
2 - EI and CPP ineligibility are regulated federally. If EI and CPP are not withheld at source, or, if the employee is ineligible for EI and/or CPP per CRA laws and regulations, then their T4 slips would indicate that.
3 - Some private corporation owner/ operators pay themselves annually with no income taxes withheld. This is not per regulation but is often done.
4 - Self contribution for CPP indicates that this is not an employee but rather a sub-contractor and was issued a T4 in error instead of a T4A. CPP self contribution is a hint that this may be a special case, possibly based on job or industry.
5 - Employees are subject to Provincial and Territorial labour standards re breaks, hours, and paid hours. Unusual hours is a hint that this may be a special case, possibly based on job or industry.
6 - Additionally or alternately, some employees are subject to Federal employee standards.
7 - Some employees, some industries, some trades, some professionals, some technologists, foreign workers are subject to additional work classification or employment contract standards and/or regulations. It is a best practice to always search #CRA + key works about the job or trade.
Taxi drivers are a special case.
8 - How taxi drivers are issued income slips is detailed by CRA under special rules in the links below.
9 - I strongly urge you to have your client obtain a document from their employer that they comply with the CRA except below. It appears that this based on a special or industry ruling.
#CRA Slips Reference Menu
#CRA Taxi Driver T4 requirements
Taxi drivers and drivers of other passengerÂ-carrying vehicles
Taxi drivers and drivers of other passengerÂ-carrying vehicles
If these workers are your employees, you have to deduct Canada Pension Plan (CPP) contributions, employment insurance (EI) premiums, and income tax as you would for regular employees.
When the workers have an interruption in earnings, you generally have five calendar days after the end of the pay period in which an employee’s interruption of earnings occur to issue an electronic Record of Employment (ROE).
If these workers are not your employees, the following special rules apply and you have to report the gross earnings on their T4 slip. See the reporting instructions for the information on how to complete the T4 slip for those workers.
## Special rules
Drivers who are not employed under a contract of service may be in insurable employment. At the taxi industry’s request, a special EI regulation was created to protect taxi and passenger-carrying vehicle drivers who are not employees.
The regulation was created because these workers often go through periods without work. The regulation applies to drivers who meet both of the following conditions:
- do not own more than 50% of the vehicle
- do not own or operate a business
The earnings of these workers are insurable even though they are not employees. We consider the company for which the drivers are providing driving services to be a deemed employer for EI purposes. Drivers who do not satisfy these conditions do not qualify under this regulation, so their employment is not insurable.
A driver is considered to be the owner/operator if they meet both of the following conditions:
- the driver is in a position to gain a profit or risk a loss from the operation of the taxi business
- the driver has the right to operate a taxicab
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Since it is a T4 and not a T4A, it is employment income and needs to be reported as such. In order to claim the mentioned expenses, the employer needs to issue a T2200 (23) detailing all the expenses you mentioned to become deductible.
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Thank-you, appreciate your help.
Bill
Thank you for the very detailed response, appreciate the help.
Bill