Revised- Tax Obligations for Commercial Ridesharing & Delivery

Commercial ridesharing is a part of the sharing economy and involves the driver of a vehicle providing passenger transportation services to customers through a mobile app or website. Lyft and Uber are both popular commercial ridesharing apps.

Compared to other platform economy categories, commercial rideshare drivers are usually considered self-employed and have unique tax obligations.

Reporting all of your income, including tips, on your income tax return is a requirement for both full-time and side job commercial rideshare drivers.

Business expenses, such as fees the platform is kept for administration and maintenance purposes, and other goods and services you purchase to earn income, are eligible to be claimed by self-employed individuals.

When you start earning money from commercial ridesharing services, it’s important to register for a GST/HST account.

You must charge, collect and remit GST/HST to the Canada Revenue Agency. You are able to take advantage of input tax credits for GST/HST you pay on expenses associated with providing commercial ridesharing services.

Delivery services, which are a component of the gig economy, involve short-term contracts in which self-employed drivers use mobile apps or websites to deliver goods to end consumers. UberEats and SkipTheDishes are among the most popular delivery apps out there.

Delivery service drivers who work independently for delivery apps are considered self-employed contractors with unique tax obligations.

Whether you provide delivery services on a full-time or part-time basis, you are responsible for reporting all of your income, including any tips you earn, on your income tax return.

If you’re considered self-employed, you can claim expenses like fees paid to the platform for administraadministration and maintenance purposesas other goods and services you buy to earn income.

If your only service is delivery, you are required to register for a GST/HST account and collect and remit taxes when you surpass the small supplier threshold of $30,000 over four calendar quarters. Regardless of whether you are a small supplier earning less than $30,000. You have the option to register for a GST/HST account.  Registration allows you to claim input tax credits for GST/HST paid on expenses incurred for providing delivery services.

Whether you participate in one area of the platform economy or multiple, it is essential that you keep organized books and records to report your income and GST/HST, and to claim your eligible expenses.

If you have not reported your income or remitted GST/HST from commercial ridesharing and/or delivery services in previous years, you may have to pay penalties and interest on the amount of GST/HST not remitted in addition to the tax on the unreported income. By correcting your tax affairs voluntarily, you may avoid or reduce penalties and interest.

To correct your tax affairs, please contact us for more details.

This blog is not a professional advise or recommendation, please contact us for more details or visit the CRA website for more details.