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Tax Obligations of UBER (Ridesharing) Drivers

UBER has grown to be part of Canada’s transportation landscape. Many Canadians are either earning their income primarily as UBER drivers, or are supplementing their income by driving when not otherwise working. UBER has caused a disruption in the taxi industry by providing a very large pool of potential transportation providers that are easy to access and drive a variety of vehicle. So, with UBER likely here to stay, and more “sharing economy” disruptors likely to appear and dominate, what are the tax consequences of being an Uber driver? And what are the uber driver tax tips to save money. Given that taxi drivers have to register for HST/GST and remit this, and (of course) pay tax on their incomes, how are UBER driver’s treated by the tax man?

Almost all UBER drivers are in business, meaning that their earnings are business income. This means that Uber drivers have to report their revenues and get to deduct their expenses come tax time, and they have to pay tax on their profits. The CRA also required Form T2125 to be included with the Uber driver’s tax return. What is less well known is that Uber drivers also have GST/HST obligations.

As of July 1, 2017, the Canada Revenue Agency requires that all UBER driver’s charge and collect GST/HST on each trip and then remit the net tax collected to the government. UBER doesn’t permit individual drivers to charge GST/HST separately, rather the tax is added by UBER on top of the fare. Each UBER driver has to register for and obtain an HST/GST number from the Canada Revenue Agency. This is irrespective of how much the driver earns in a year and whether or not the driver is considered to be a “small supplier” by the CRA.

GST is 5% and HST in Ontario is 13%. This amount must be added to and collected from each ride. The driver gets to deduct GST/HST that was paid on gasoline (or other fuel) used to operate the vehicle while earning money as an UBER driver, as well as the GST/HST for vehicle repairs, maintenance, washes, leases, and purchases. The net amount – the GST/HST collected less the Input Tax Credits claimed – is what has to be remitted to the government.

As technology changes how business is done and life is lived and services are delivered, the tax man has to adjust. There is no such thing as a free ride, not on the CRA’s dime. The sharing economy – whether it is UBER or AirBnB or any of the many other’s in existence – gives rise to tax consequences. Make sure you know your obligations so that your windfall doesn’t turn into a CRA headache.

FAQS

What are included in the tax summary document for Uber drivers?

Your tax summary is an Uber-generated tax document. It provides a detailed breakdown of your annual earnings and business-related expenses that may be deductible. Potential deductions may vary depending on how your business is set up. Most commonly, your tax summary includes a breakdown of annual earnings and business-related expenses that may be deductible.

How is Uber tax calculated?

Each UBER driver has to register for and obtain an HST/GST number from the Canada Revenue Agency. This is irrespective of how much the driver earns in a year and whether or not the driver is considered to be a “small supplier” by the CRA. GST is 5% and HST in Ontario is 13%.

Are Uber drivers categorized as self employed?

If you drive for Uber or Lyft, you are self-employed. As a driver for either company, you are an independent contractor rather than an employee. As an independent contractor, you provide transportation services to individuals.

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pro-tip

Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.

This is an announcement from Aaron Baer, legal counsel to Faris CPA.

I have been working with Faris CPA for more than 10 years.

Faris CPA is being attacked by Kenneth John Weakley (Oct 1969).

I am posting this review because Kenneth John Weakley has been deleting his reviews and has been reposting them, so that Faris CPA's responses don't always show up.

Faris CPA's position is as follows:

Faris CPA is a well-regarded firm that is compliant with CPA Ontario obligations and has a good track record.

Under no circumstances will Faris CPA be paying Kenneth John Weakley any amount.

Kenneth John Weakley's claims do not have any merit.
Response from the owner:Thank you Aaron for your help with this matter. Please see below my entire response to Kenneth John Weakley (DOB: October 20, 1969). “Attention all readers: Faris CPA and 3 other reputable lawyers in the GTA are being aggressively attacked with fake Google reviews posted by Kenneth John Weakley (DOB October 20, 1969). Unfortunately, his repeated blackmailing and extortion attempts for the past few months have failed and he is still hoping to be successful by keep posting those false and fake reviews. Please note all personal information mentioned in our response is available online, publicly available and anyone can access it and none of the information was obtained while doing business with Kenneth John Weakley. Feel free to Google his name and see the below link to confirm. As such, there is no breaching confidentiality issue whatsoever. https://find-and-update.company-information.service.gov.uk/officers/EfbNEs5kNSRQeb9uq8kdZL0LGm8/appointments This is a fake review posted by Kenneth John Weakley (DOB: October, 20 1969). Address: 821A Fulham Road, London, U.K. SW6 5HG
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Response from the owner:Thank you for the five stars and the positive review.
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