Ride-Sharing in Canada: A Fact Sheet
Definition of Ride-Sharing:
● Ride-sharing involves a passenger travelling in a private vehicle, usually for a fee, arranged through a website or mobile application ("app").
● It is a prominent segment within Canada's emerging sharing economy.
Changes to "Taxi Business" Definition (Effective July 1, 2017):
● The definition of a "taxi business" for GST/HST purposes now includes providers of ride-sharing services.
● Transportation arranged or coordinated through electronic platforms (apps or websites) falls under specific CRA rules for taxi operators and commercial ride-sharing drivers.
● Exemptions apply to school transportation services for students and sightseeing services.
Tax Obligations for Ride-Sharing Participants:
● Owners/drivers engaged in ride-sharing must be aware of tax obligations, whether it's their sole income source or a part-time activity.
● Participants are considered taxis in Canada, irrespective of driving time.
● The GST/HST threshold of $30,000 in gross revenue does not apply.
● All income, including tips, must be reported on income tax returns.
● Collecting and remitting GST/HST on all fares is mandatory.
What Expenses can Ride-Share Drivers Claim:
● App Fees (including service fees, booking fees and other fees such as airport, city orvsplit fare fees)
● Gas, oil, windshield washer fluid, brake fluid, antifreeze and other maintenance expenses
● Repairs and routine oil changes
● Tolls or parking costs
● Tires (including the cost of balancing/installation)
● Car washes/detailing
● Supplies such as pens/paper
● Freebies for customers
● A portion of cell phone expenses
● You can write off part of your car insurance premiums
● Interest on money borrowed to buy a motor vehicle
● Lease payments(Keep in mind that if you claim your vehicle’s lease expenses, you cannot claim a depreciation value for it
● If you own your car, you can claim the capital cost allowance (CCA). You claim a deduction over several years based on the depreciation percentage until it wears out or has no value left. Each vehicle class has a different CCA
How do you know how much of your use of the vehicle was directly business-related and how much was personal?
The best evidence to support the use of a vehicle is an accurate logbook of business travel maintained for the entire year, showing for each business trip, the destination, the reason for the trip and the distance covered. Tying that into a calendar also helps to support a claim. The information required is your odometer reading at the beginning and end of the year. As well as the amount driven each day for business use only. For all other expenses, you can record them on a self-employment spreadsheet.
*Tip-Quickbooks Self-Employed has an app that takes care of the tracking of trips for you, and once you arrive at your destination, the app asks you if that trip was personal or for business. Brilliant eh?
Detailed Information and Resources:
● Refer to the GST/HST and Commercial Ride-sharing Services info sheet for comprehensive details.
● Understand tax obligations by reviewing the "Involved in the sharing economy? Know your tax obligations!" tax tip.
Collecting and Remitting GST/HST:
● Participants relying on apps or websites for fare collection must ensure proper GST/HST collection and remittance.
● Utilize the GST/HST calculator (and rates) to facilitate accurate calculations.
Reporting Obligations and Considerations:
● Understand reporting obligations for sharing economy revenues.
● Amounts held back or deducted by sharing economy platforms may be considered as deductible expenses or eligible for GST/HST input tax credit, with individual situations varying.
● Retain a copy of the ride-sharing agreement for record-keeping purposes.
For more information, consult the GST/HST and Commercial Ride-sharing Services info sheet and other relevant resources provided by the Canada Revenue Agency. Stay informed about your tax obligations as a participant in the ride-sharing sector.
