Tax Tip - REVISED - Tax obligations for commercial ridesharing and delivery services

OTTAWA, ON, June 11, 2024 /CNW/ - 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:

Income Tax and GST/HST for commercial rideshare or delivery service drivers
	Commercial ridesharing drivers	Delivery service drivers	Drivers who provide commercial ridesharing and earn revenue from other commercial activities such as delivery services
Income tax	Must file income tax return regardless of how much revenue is earned. May be eligible to claim expenses incurred to earn income from commercial ridesharing services.	Must file income tax return regardless of how much revenue is earned. May be eligible to claim expenses incurred to earn income from delivery services.	Must file income tax return and report all income earned from commercial ridesharing and other commercial activities. May be eligible to claim expenses incurred to earn income from commercial ridesharing and other commercial activities.
GST/HST	Must register for, collect, and remit GST/HST on all fares May claim input tax credits on GST/HST paid on expenses incurred in providing commercial ridesharing services	Must register for, collect and remit GST/HST when sales exceed the small supplier threshold Registrants may claim input tax credits on GST/HST paid on expenses incurred in providing delivery services.	Must register for, collect, and remit GST/HST on all fares from commercial ridesharing services. May extend registration to other commercial activities to collect and remit GST/HST on all taxable sales if combined total taxable sales do not exceed the small supplier threshold. Must collect and remit GST/HST on all taxable sales once the small supplier threshold is exceeded. May claim input tax credits for GST/HST paid on expenses incurred in providing commercial ridesharing services. May claim input tax credits for GST/HST paid on expenses incurred in providing other commercial activities if registration is extended to this other commercial activity or the combined total taxable sales exceed the small supplier threshold.

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:

• Ask for a change to your income tax and benefit return
• Adjust your GST/HST return
• 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.

Associated links

• Register for a GST/HST account
• GST/HST and Commercial Ride-sharing Services
• Taxi operators and commercial ride-sharing drivers
• Motor vehicle records - Canada.ca
• Calculate input tax credits - ITC eligibility percentage - Canada.ca
• Classes of depreciable property - Canada.ca
• Depreciation (CCA)

Contacts

Media Relations
Canada Revenue Agency
613-948-8366
[email protected]

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SOURCE Canada Revenue Agency