We solve serious CRA tax problems

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.

About the Author

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.

Sam Faris helped me with a complex cross border tax matter. This issue involved 12 years of tax returns and it was as a result from mistakes that my previous accountant did. He was able to perfectly address the issue with the CRA and to fix the returns under the voluntary disclosure program. End results; CRA accepted Sam’s work with not a single question and the returns were reassessed to my satisfaction without penalties and interest. Many thanks to Sam brilliant work.
Response from the owner:Dear Sir It was a pleasure working on your file and get you the results that you aimed to have and to your satisfaction. We have been dealing with similar cases for many years and we were confident that the results are favorable. Please feel free to contact us in the future if you do require further help.
I found Sam’s firm online and I read the excellent Google reviews about him and his team. I decided to hire him to help me navigate an issue with the CRA. Sam delivered as expected and as promised. Results were to my satisfaction and I am very happy with how the process was handled. Highly professional and extremely knowledgeable.
Response from the owner:Dear Tanya Thank you for the 5 stars Google review and your kind words. We strive to provide the best customer service and make our clients relax and calm during the process. The cases we are taking are very sensitive so providing quality work to the CRA is extremely important so just to avoid any escalation and to make sure that our package is accepted from the first round. We will remain at your disposal anytime you require our services. Sam Faris
You will notice Sam is very quick with his responses. He knows his stuff and gives solid advice. Highly efficient, would recommend.
Response from the owner:Dear Jay Thank you for the 5 stars positive review. Working with you was pleasant too. Many thanks for your business and please do feel free to contact me if you have any questions. Sam Faris
after the initial assessment I had with Sam, he proposed a strategy to dispute CRA decision. He knew up front how to approach my case as he seemed that he dealt with similar cases many times. I hired him the end results were as promised and no surprises. Sam is very trust worthy and has a high business standards. May thanks Sam.
Response from the owner:Many thanks for the positive review.
I recently turned to Faris CPA for help with my tax filing, and I must say, I'm over the moon with the results! The whole process was a breeze, saving me time and stress. What really stood out was the friendly professionalism, impressive expertise, and crystal-clear communication from Sam and his team. They made what could've been a daunting task feel like a walk in the park! If you're looking for a warm, approachable tax expert who genuinely cares about his clients, I wholeheartedly recommend Sam and the folks at Faris CPA - they're great tax consultants!
Response from the owner:Many thanks.
Working with Sam and his team was an extremely valuable experience. One of the best Tax consultants in Toronto I've ever come across.

He has a ton of experience resolving problems with the CRA and was truly a big asset to me when I had issues I needed help with.

Would highly recommend Sam and Faris CPA, thanks again for all the great work!
Response from the owner:Thank you Paul for your positive feedback and we are glad we met your expectations.
I had an amazing experience working with Faris CPA for my CRA needs. They really know the CRA processes and made everything so easy. They were super professional, always ready to answer my questions, and made sure everything was done right. I couldn't have asked for better help. Highly recommend their services for anyone dealing with the CRA! -Sara
Response from the owner:Thank you Sara for the 5 stars review.
Faris CPA absolutely fantastic tax consultant firm. Sam and his team help me with an extremely difficult tax audit by CRA. They have done an amazing job. You guys are amazing and well deserve five star.
Response from the owner:Dear Eliyas Thank you for the positive Google review and the kind words. We heave dealt with many CRA audit cases. We have delivered the best services to our clients as we are confident with our work and its quality. Please feel free to reach out us if you require our services in the future. Sam Faris
Sam Faris is number one tax advisor and consultant. I contacted a few professionals but he was the only one who was able to help me with my dispute with the CRA. Many thanks to him.
Response from the owner:Said Thank you for the kind words and the 5 stars Google review. CRA issues may get very complicated. I am glad that everything worked out perfectly with you. Feel free to reach out to us any time you require our services. Sam Faris