So you’ve taken the plunge and joined the rideshare economy. Congrats!
Driving for Uber is one of the most flexible jobs in Canada. Whether it’s your full time job, part-time gig, or an occasional source of side income, the rules around taxes for rideshare income are quite specific. Here are the (tax) rules of the road.
- If you work for a ridesharing app like Uber, all your earnings are taxable, and it’s recommended you put 25% of your income aside for the taxman.
- Driving for a rideshare app requires you have a GST/HST number from Day One.
- Being a driver for a rideshare app has different tax implications than being a courier for a food delivery service. Understanding the difference upfront can help reduce headaches and penalties at tax time.
Do Uber Drivers Pay Taxes?
Contrary to popular belief, yes they do. When you’re a driver for a ridesharing company, you’re considered an independent contractor, not an employee, of the company. This means the company doesn’t withhold taxes from your income on your behalf and means you’ll need to report money you make from rideshare driving as self-employment income.
How Much Taxes Do Uber Drivers Pay?
It’s recommended you set aside at least 25% from your net business earnings (not the gross amount) for taxes owing.
What If You Deliver for an Online Food Ordering Company like Uber Eats?
The Canada Revenue Agency (CRA) looks at being a ‘courier’ for a food delivery app and being a ‘driver’ for a ride sharing app as two different business activities, so the tax reporting requirements differ for each. If you’re classified as a courier, you’re in luck: GST/HST registration is not necessary until your income surpasses $30,000.
What Information and Uber Drivers Need to File Taxes?
To report your income to the Canada Revenue Agency (CRA), complete and submit Form T2125 – Statement of Business or Professional Activities along with your tax return.
To do this, you’ll need to gather the following information:
- Your annual tax summary from the rideshare company (or companies) that you work with
- Receipts, bills, and statements for all of your tax-deductible expenses
- Your total vehicle mileage for the year as calculated from the odometer reading at the beginning of the year and the odometer reading from the end of the year
- The number of kilometres that you drove for business use and personal use
- Your Social Insurance Number (SIN)
- Your GST/HST number (business number)
- Any other tax documents and receipts that are related to your employment as a rideshare driver (e.g. any amount of tips you’ve made)
TIP: Even if you don’t have everything, you can still get started with TurboTax. We’ll ask you easy-to-answer questions, and fill in all the right tax forms for you. It’s easy to come back once you gather the rest of your information as all your progress is saved.
Once you’ve completed the process, you’ll see one of two amounts:
- What you owe the government in taxes or
- What you’ll receive from the government as a tax refund
What Expenses Can Uber Drivers Claim?
Deductible expenses are what helps lower your tax owing, so be sure to claim all your eligible costs – not all of which are obvious. These include:
- App Fees (including service fees, booking fees and other fees such as airport, city or split fare fees)
- Gas, oil, windshield washer fluid, brake fluid, antifreeze and other maintenance expenses
- Repairs and routine oil changes
- Tires (including the cost of balancing/installation)
- Lease payments
- Car washes/detailing
- Supplies such as pens/paper
- A portion of cell phone expenses
- Capital cost allowance (CCA) on the vehicle
How do I file my taxes with TurboTax?
- Getting started: Head over to TurboTax and hit “get started” on your preferred TurboTax product. You’ll be directed to log in to your Uber account for a quick verification. Just use your uber credentials to sign in.
- Linking your Uber Account: Once you’re in TurboTax, answer a few simple questions about your tax situation. Next up you will be taken to the Uber Connect page. Hit “connect account, type in your Uber details one more time, and you’re good to go!
- Smooth Integration: TurboTax works its magic and links up with your Uber account, pulling in all your driving-related expenses. Your expenses will pop up on your screen for you to check out. When you’re happy with this, just hi “import”, and watch as your uber expenses appear in your tax return
- Wrapping up Your Filing: TurboTax will add the right forms based on the info you provided. From there, just follow the prompts to wrap up your tax filing – it’s as simple as that!
The call support was perfect for me. Even though it cost extra, it was worth every cent. Brenda went out the way for me and researched multiple issues as I was filing my Uber income for the first time and it was complicated along with my regular income. Really happy to recommend TurboTax to everyone.
Do Rideshare Drivers Have to Charge and Claim GST/HST?
Ridesharing drivers are subject to the same Goods and Services Tax/Harmonized Sales Tax (GST/HST) regulations as taxi operators, which means every dollar of their income is subject to GST/HST.
In addition to registering for a GST/HST number, rideshare drivers are required to charge, collect, report and remit GST/HST on every fare. These requirements apply no matter how much – or little – income you earn from ridesharing.
The amount of GST/HST you need to charge on fares varies by province. For example, the GST/HST rate in Ontario is 13%. You can view the current list of provincial GST/HST rates here.
Read: Accounting Methods for Ride-Share GST/HST to learn how GST/HST gets calculated for ridesharing.
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Whether driving is your main income source or side hustle, TurboTax makes it easy to file your self-employment tax return with confidence. Our software prompts you for information, step-by-step, helping you find the eligible deductions and credits that will save you money.
If you’d like more guidance, check out TurboTax Live, where you can get unlimited access to live tax experts who can answer all your questions, review your tax return, or even do your taxes for you completely.
Whichever option you choose, with TurboTax at the wheel, it’s never been easier to keep your eyes on the road.