A common misconception associated with being a ride-sharing driver for a company like Uber or Lyft is that the income that’s earned isn’t taxable. The truth is, this income is as taxable as any other form of self-employment income.
To report this self-employment income, you’ll need to complete and submit a T2125: Statement of business or professional activities with your return. If you’re filing a Québec return, you’ll also have to complete a TP-80-V: Business or professional income and expenses in Québec form. Both the T2125 and TP-80-V are combined in H&R Block’s tax software.
Note: Make sure you keep detailed records of all the expenses you incurred as a ride-sharing driver in case the Canada Revenue Agency (CRA) or Revenu Québec (if applicable) asks to see them at a later time.
Collecting GST/HST on your fares
If you drive for a ride-sharing service, the GST/HST rules that apply to taxi drivers will also apply to you as of July 1, 2017. This change means that even if you earn less than $30,000 a year (the small supplier threshold) as an Uber driver, you still need to register for a GST/HST account number, collect the correct amount of GST or HST on your fares, and remit these amounts to the government.
How much GST or HST do I need to collect?
Depending on which province or territory you live in (and whether you’re using the quick method of accounting), the GST or HST amount that you’ll collect and remit to the government will be different. Collect:
- 5% in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Saskatchewan, and Yukon
- 13% in Ontario and
- 15% in New Brunswick, Québec, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island
Since GST or HST is usually included in the fares charged by the taxi company or commercial ride-sharing driver, you might have to manually calculate the amount of GST or HST related to each fare you charged.
Let’s say you’re a commercial ride-sharing driver in Ontario, where an HST of 13% is applied to the sale most goods and services. On a $30 fare, you’d need to remit an HST amount of $3.90 to the government, calculated as follows:
$30 x 0.13 = $3.90
What do I do once I’ve collected GST/HST on my fares?
You’ll need to complete and file a GST/HST return either annually, quarterly, or monthly based on your reporting period. While the Canada Revenue Agency (CRA) is responsible for assigning this reporting period to you, your total revenue is what generally determines the number of times you’ll need to file a GST/HST return each year.
For more information on calculating your total income and filing a GST/HST return, refer to the CRA website.
Can I claim the GST/HST I paid on expenses?
Yes. If your business is a GST/HST registrant, you can claim a rebate for the GST/HST you paid on certain expenses by completing form GST370: Employee and partner GST/HST rebate application.