REVISED - Tax obligations for commercial ridesharing and delivery services
CRA SOURCE ARTICLE
The platform economy includes economic activities facilitated by digital platforms, like websites or mobile applications. Commercial ridesharing and delivery services are two common activities in the platform economy sector. These activities are part of different areas of the platform economy, and come with different tax obligations.
What is commercial ridesharing?
Commercial ridesharing is part of the sharing economy and consists of an arrangement where the driver of a vehicle provides passenger transportation services to customers, facilitated by a mobile app or website. Popular commercial ridesharing apps include Lyft and Uber.
Commercial rideshare drivers are generally considered self-employed and have unique tax obligations compared to those of the other platform economy categories.
Income tax obligations for commercial rideshare drivers
Whether you’re a commercial rideshare driver on a full-time basis, or as a side job, you must report all of your income, including tips, on your income tax return.
As a self-employed individual, you may claim business expenses such as fees the platform keeps for administrative and maintenance purposes and other goods and services you purchase to earn income.
GST/HST obligations for commercial rideshare drivers
You must register for a GST/HST account the moment you start earning money from commercial ridesharing services.
You must charge, collect and remit GST/HST to the Canada Revenue Agency. You may claim input tax credits for GST/HST you pay on expenses you incurred for providing commercial ridesharing services.
What are delivery services?
As part of the gig economy, delivery services are short-term contracts where mobile apps or websites are used by self-employed drivers for delivering goods to end consumers. Commonly used delivery apps include UberEats and SkipTheDishes.
Delivery service drivers who work independently for delivery apps are considered self-employed contractors with unique tax obligations.
Income tax obligations for delivery service drivers
Whether you participate in providing delivery services on a full-time basis or as a side job, you must report all of your income, including any tips you earn, on your income tax return.
If you are considered to be self-employed, you may claim business expenses such as fees the platform keeps for administrative and maintenance purposes, as well as other goods and services you purchase to earn income.
GST/HST obligations for delivery service drivers
Generally, if you only provide delivery services, you have to register for a GST/HST account and collect and remit taxes once you exceed the small supplier threshold of $30,000 over four calendar quarters. You may choose to register for a GST/HST account even if you are a small supplier earning less than $30,000. Once you are a registrant, you may claim input tax credits on the GST/HST paid on expenses incurred for providing delivery services.
Differences between being a commercial rideshare or delivery service driver
Here’s how your tax obligations differ if you provide commercial ridesharing services, delivery services, or both:
Keeping books and records
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.
Correcting your tax affairs
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 (including corrections to GST/HST returns) and report income you did not report in previous years, you may:
Submit an application through the Voluntary Disclosures Program. If accepted, you will receive prosecution relief, and in some cases penalty relief and partial interest relief that you otherwise would have had to pay.
More information
To find more information on the platform economy, refer to: Taxes and the Platform Economy.