Taxis drivers and drivers of other passenger­-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 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:

• do not own more than 50% of the vehicle; and
• 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 he or she meets 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; and
• the driver has the right to operate a taxicab.

CPP contributions and income tax

For CPP and income tax purposes, we consider individuals who are not employed under a contract of service to be self-employed. They are responsible for paying their CPP contributions and income tax when they file their income and benefit returns.

Do not deduct CPP or income tax from these workers.

EI premiums

If you are the deemed employer, you have to pay both the driver's share and your share of EI premiums. The driver's insurable earnings are calculated based on the net revenue.

There are two ways to determine the insurable earnings for a week, depending on whether or not you know the driver's actual earnings and expenses:

1. If you know how much the driver earned in a week and the expenses the driver incurred while operating the vehicle, calculate the insurable earnings as the difference between the two amounts, up to the maximum annual insurable earnings.
2. If you do not know how much the driver earned in a week or the expenses the driver incurred while operating the vehicle, the amount of insurable earnings is the lesser of:
   • the number of days worked in the week multiplied by 1/390 of the maximum of the annual insurable earnings; or
   • 1/78 of the maximum of the annual insurable earnings.

Date modified:

2017-01-19