Prior to budget changes back in 2017, ride-share drivers whose gross annual income fell below $30,000 were considered to be “small suppliers” by the Canada Revenue Agency (CRA) and as a result, were not required to register for a Business Number or charge, collect, report and remit the GST/HST for ride-sharing fares.
The change might have appeared small in scope, but the implications of the change are significant.
Fast forward, and now, ride-share drivers are now included in the definition of “taxi business” for GST/HST purposes which means they are no longer “small suppliers” and now subject to the same GST/HST regulations as taxi operators.
What Do I Need to Do with the CRA?
- Register for a GST/HST number
- Charge and collect GST/HST
- Report and remit GST/HST collected on your ride-sharing fares
These requirements apply no matter how much income you earn from ride-sharing. All fares charged by a ride-share driver are now subject to GST/HST.
How To Register For GST/HST?
To open a GST/HST account, use one of the following ways:
- Use Business Registration Online
- Use Form RC1, Request for a business number and certain program accounts
- Call 1-800-959-5525 and be ready to answer questions from Form RC1, Request for a business number and certain program accounts
If you are already registered for the GST/HST for your ride-share income, you do not need to register again.
If you already have a GST/HST account for another type of business, you may need to make updates to your Business Account, associated with your Business number (BN). You can contact the Canada Revenue Agency (CRA) directly to find out what changes are required, if any, or go online to your CRA My Account and make the changes in there.
What is the Reporting Period?
When you set up your GST/HST account with the CRA, you’ll need to choose a reporting period. Your reporting period will determine how many times a year you’ll need to file a GST/HST return. The default reporting period for ride-share partners/drivers is annually, although quarterly and monthly options are available, depending on your gross annual income.
Each reporting period has its advantages and disadvantages. If you choose the annual reporting method, you’ll typically submit your GST/HST return when you file your personal tax return. Your personal tax return is due on April 30th. It’s important to remember that even though your tax return is due June 15th because you’re self-employed, if you have tax owing, you’ll need to pay your taxes by April 30th.
If you choose the quarterly or monthly reporting method, your GST/HST return will be due more often (4 times and 12 times respectively).
How Much GST/HST Do I Need to Charge?
The amount of GST/HST you need to charge and collect on fares varies by province. For example, the GST/HST rate in Ontario is 13%. The current list of provincial GST/HST rates can be found on CRA’s Charge the GST/HST page.
It is important to remember that GST/HST must be charged on the total fare – not on your net earnings/payout. For example; if a total fare is $10.00, GST/HST must be charged/collected on the $10.00, regardless of any fees or expenses you might have.
How Do I Calculate My GST/HST Remittance Amount?
How you calculate the amount of GST/HST to pay to the CRA depends on the method of accounting you choose. You’ll find details on both the Regular Method and the Quick Method on our Accounting Methods for Ride-Share GST/HST page.
How Do I File a GST/HST Return?
You can choose the filing method you prefer with the CRA:
- Online using the GST/HST NETFILE or the My Business Account portal with the Canada Revenue Agency My Business Account
- In-person (along with remittance payment) at participating banks and financial institutions
- By mail to the address on the return.
What Other Steps Do I Need To Do If I Live In Quebec?
Quebec residents have to apply for GST/HST and QST numbers. You only need to register for the QST number, the GST/HST number will be generated automatically.
To file your GST/QST return, you can either use the online express service or use the “My Account for business” website. To mail the return, you will need to fill the FPZ-500V form sent to you by Revenue Quebec, as it is not available online and must be mailed. However, a similar form can be filled using FP-500. This form cannot be mailed; it is a tool to help you prepare for the FPZ-500V when you receive it.
Jennifer is the Social Care Manager for TurboTax Canada. When she’s not helping customers on Facebook, Twitter, and TurboTax’s community forum AnswerXchange, Jennifer is busy researching the latest tax changes.
Jennifer has been preparing tax returns for over 30 years and enjoys holding tax seminars for seniors in her hometown of St. Vincent’s, Newfoundland.