Owner-operator taxes in Canada: what your corporation files, and what it can deduct

Summary

An owner-operator is a driver who owns or leases a truck and runs it as their own business, usually hauling for a larger trucking company (a carrier) rather than for the customers whose freight moves. Here’s the order we’d work through a year, for an owner-operator running one to three trucks in their own corporation.

1. Settle first whether your corporation is really in business on its own account. Where it supplies a driver and no truck, the Canada Revenue Agency (CRA) can treat it as a personal services business, and almost every deduction below disappears.
2. The money is due before the paperwork. Your corporation pays its tax two or three months after its financial year ends, and files its corporate income tax return, a form called the T2, at six months.
3. If you haul as a carrier in a continuous freight movement and another carrier invoices the customer, your qualifying interline charge carries GST/HST at 0%. GST/HST is the federal goods and services tax, merged with provincial sales tax in some provinces.¹ You still claim back the GST/HST you paid on fuel and repairs, so CRA owes your corporation money most periods, and we’d file those GST/HST returns monthly to collect it sooner.
4. Your corporation deducts 80% of what you spend on meals on the road, rather than the usual 50%. The trip has to keep you 24 continuous hours and 160 km from the place your corporation operates from, normally your home address.

Whether your corporation is really in business

A personal services business can arise where, without the corporation, the person doing the work would reasonably be the client’s employee. The full test has other conditions, and one client alone doesn’t settle it. A corporation caught by that name loses almost every deduction a truck generates, so fuel, repairs, insurance and meals all stop being deductible. The corporation also pays a higher federal tax rate than an ordinary small business does.² The combined federal and provincial rate depends on your province, while the denied expenses add to the taxable amount.

For an owner-operator who owns or leases the tractor (the cab and engine unit that pulls the trailer) and pays for their own fuel, maintenance and idle days, we think the worry is overblown. CRA’s own guidance on truck drivers treats money invested in equipment, and the chance of making or losing money on a run, as pointing toward a business rather than a job.³ Our view holds so long as the equipment is yours. Where your corporation supplies a driver and nothing else, settle the classification question first, because every answer below depends on it. CRA has paid for a program that audits trucking corporations on exactly this point.⁴

Filing and payment deadlines

Your corporation’s T2, the corporate income tax return, is due six months after the end of its financial year, so a December 31 year-end means filing by June 30. The tax itself is due earlier. Whatever tax the corporation still owes for the year, which CRA calls the balance owing, has to be paid two months after year-end, four months before the return that works it out. Some corporations get three months rather than two. The extra month needs CCPC status throughout the year, a small business deduction claimed this year or last, and prior-year taxable income within the applicable business limit, counting associated companies. The deduction cuts the federal rate on active business profit (i.e. profit from running the business rather than investments).⁵⁶ The T2 is due even in a year the truck sat still. Our guide to the deadlines an incorporated owner actually has covers the instalment payments made during the year, payroll, and the slips your corporation files for the people it pays.

Separate trucking obligations include fuel-tax returns under the International Fuel Tax Agreement (IFTA), plate renewals under the International Registration Plan (IRP), and provincial operating credentials. Transport filings and operating credentials (e.g. Ontario’s commercial vehicle operator’s registration) need their own calendar alongside the CRA deadlines.

GST/HST when you haul for another carrier

Your corporation counts as a carrier for GST/HST purposes where it supplies the truck and takes responsibility for moving the freight. Holding your own operating authority, which is the government licence to haul freight in your own name, isn’t what decides it, and you can count as a carrier without one. Supplying a driver and no vehicle is a different sale, which CRA treats as an ordinary taxable service, so you’d charge GST/HST on it at the normal rate.¹

Where you are a carrier in a continuous freight movement and another carrier bills the shipper or consignee, meaning the sender or recipient of the goods, that other carrier determines the tax on its customer invoice. Your invoice to them is what CRA calls zero-rated interlining: you charge tax on it at a rate of 0%, which isn’t the same as charging no tax at all. The difference matters, because charging 0% keeps your input tax credits, meaning the refunds of the GST/HST you paid on your own costs. The tax on fuel, tires and repairs still comes back to you.¹

Your corporation therefore ends most reporting periods with CRA owing it a refund, which makes how often you file a cash-flow question. At $1,500,000 or less of annual sales, and zero-rated interline revenue counts toward that total even though you charge 0% on it, CRA puts you on an annual reporting period unless you ask for something else.⁷ An annual filer’s deadline is three months after its financial year ends, so waiting until then can delay a refund for most of a year. We’d elect monthly reporting instead, so long as qualifying zero-rated freight leaves you regularly claiming refunds large enough to justify the extra filings. What monthly costs you is twelve returns a year rather than one, and bookkeeping that has to stay current every month.

Meals on the road

A business can normally deduct only half of what it spends on food and drink. The Income Tax Act lifts that to 80% for meals a long-haul truck driver eats during what it calls an eligible travel period.⁸ Three conditions have to line up at once, and it’s easy to clear two of them and miss the third.

• The truck has to be built for hauling freight, with a gross vehicle weight rating above 11,788 kg. That rating is the loaded weight the manufacturer certifies, and it’s stamped on the door frame plate.
• The trip has to keep the driver at least 24 continuous hours away from the place your corporation operates from, and take them at least 160 km away of that same place. For a corporation run out of your house, it’s your home address, not the carrier’s terminal. If the truck lives at a yard you rent, ask us which address applies before relying on the 80%.⁸ The test runs trip by trip, so a regional run that gets you home the same night stays at 50%, however long the day ran.
• Driving a long-haul freight truck has to be the driver’s main job, which takes care of itself while you’re the one behind the wheel all week.

There are three ways to pay for a meal on the road, and any one meal can use only one of them.

1. The corporation pays you a set allowance per meal, backed by trip records. We’d usually do this, so long as the rate is defensible on the routes you run. If the allowance is unreasonable, the whole allowance can become taxable employment income, rather than only the excess. It then belongs on your T4, the slip reporting employment income, so agree the rate and supporting records before paying it.⁹
2. The corporation pays the restaurant bills itself, on a company card. We’d move to this where the corporation already captures receipts electronically (e.g. a company card that captures restaurant receipts), since the record it leaves beats any allowance. The cost is the discipline of keeping personal meals off the card.
3. You pay personally and claim the meals on your own tax return, on CRA’s Form TL2, which is the meal-and-lodging form for employed drivers. Claiming this way lets you use CRA’s flat rate instead of keeping receipts, $23 a meal to a maximum of $69 a day for the 2025 tax year. The flat rate is the amount you’re treated as having spent before the 80% applies, so about $18.40 a meal comes off.¹⁰ We’d still reach for this last, because the corporation deducts nothing and you fund a year of meals out of money you’ve already paid personal tax on.

The truck itself follows capital cost allowance rules, which determine how much of its purchase cost you can deduct each year. First-year incentives can change that amount, and a new September 2026 proposal would expand immediate deductions for eligible equipment.¹¹ Our guide to trucker incorporation explains the ordinary depreciation class for a heavy freight truck.

How often this changes

We’d go back through all of this once a year, at year-end planning. Revisit one piece of it early when any of the following moves.

• You start invoicing shippers directly or change routes, because the mix of zero-rated and ordinary taxable freight can change your refunds. Direct international freight can still be zero-rated, and taking your own operating authority doesn’t itself decide the tax treatment.¹
• You stop supplying the truck and start supplying only a driver, which changes both the personal services business answer and the GST/HST one.
• Your sales pass $1,500,000, where quarterly GST/HST filing becomes mandatory, or $6,000,000, where monthly filing does.⁷
• Your runs change shape, since the 24-hour and 160 km tests apply trip by trip.

Closing thoughts

Trucking is unusual in how much of the tax answer rests on records you already produce for other reasons. Your logs, your fuel receipts and your electronic logging device data exist because the fuel-tax, plate-registration and safety rules a truck runs under require them. They’re also better evidence of the 24-hour and 160 km tests than anything you could assemble a year later.¹² If you take one habit from this page, make it treating that paperwork as tax records from day one.

How we handle it

We work through an owner-operator’s year in the order above: the personal services business risk first, then the GST/HST reporting period, then the meal records. The T2 and your personal return are prepared together. If you’re carrying GST/HST periods you never filed, that’s where we’d start. Most small registrants have four years from a period’s filing due date to claim the input tax credits for that period.¹²