On July 1, 2021, Uber Rides is becoming a Canadian-based entity so we’ll surface a new agreement for signature within the Uber Driver app.
We understand you may have some questions about these changes, so we have created this list of frequently asked questions, and have updated our Tax Webpage with additional details.
IS UBER INCREASING FEES IT CHARGES DRIVERS? There is no change to the amount of the fees that Uber is charging drivers. They are the same on July 1, 2021 as they were on June 30, 2021.
WHAT ARE THESE SALES TAXES? As a Canadian-based entity, Uber will be required on behalf of the government to collect sales tax on the fees charged to you, like the Service Fee.
WHERE CAN I GO TO SEE THESE SALES TAXES? The sales taxes can be found on your invoices, as well as your Monthly/Annual Tax Summary.
WHY SHOULD I KEEP TRACK OF THESE SALE TAXES? These taxes can be claimed back when you file your tax return with the CRA.
When you file your GST return, you will need to know your net sales tax. Your net tax is the difference between the amount of sales tax you have collected and the amount of sales tax you’ve paid on expenses related to your ridesharing activities. These new taxes reduce your net sales tax and will reduce your remittance to the CRA.
WHAT OTHER TYPES OF EXPENSES SHOULD I KEEP TRACK OF? There are many types of expenses that you should track when driving on the Uber App:
Operational Expenses such as: Office supplies, cell phone usage fees, personal protective equipment (Masks, sanitizer, etc.), and parking fees. Vehicle Expenses such as: Repairs & maintenance, fuel/gas, and insurance.
These are all examples of expenses for which you may be entitled to claim an input tax credit when filing your GST/HST return to offset your GST/HST payments on those expenses. Generally speaking, an input tax credit is a refund from the government you may be eligible to claim for sales taxes you paid on your commercial expenses, including fees paid to Uber.
WHAT IS THE IMPACT ON MY EARNINGS? If you have been using the regular method of accounting, there should be no difference in your net earnings after July 1st, 2021.
If you have been using the quick method of accounting, you may want to assess whether switching to the regular method could be beneficial to you.
HOW SHOULD I CALCULATE MY NET SALES TAX? Please note that there are two ways to calculate your net sales tax: using the Quick Method or the regular method.
There are pros and cons to using both the Quick Method and the regular method. It is worthwhile to spend some time to determine which method is more appropriate or financially beneficial to you. Consulting a tax professional may assist you in making the best decision for your particular circumstance.
When you choose the Regular Method, the sales tax paid on your business-related expenses (such as the expenses listed in #5) can be deducted from the total sales tax you collect on fares during the reporting period, allowing you to reclaim the sales tax now charged to you on fees like the Service Fee.
CAN YOU SHARE AN EXAMPLE OF HOW THESE CALCULATIONS WORK? Example: A Rideshare driver in Ontario has total fares during a reporting period of $10,000. The GST/HST rate in Ontario is 13%, so $1,300 was charged and collected from riders during the reporting period. After reviewing receipts, the driver calculates that they paid $300 in GST/HST on ride-share expenses for gas, vehicle lease, vehicle repairs, and car washes. They also paid $325 in GST/HST on the Service and other fees.
Regular Accounting Method: The total net tax due for the GST/HST reporting period is $975. This figure is reported on the GST/HST return.
(GST/HST Collected) - (GST/HST Paid) = GST/HST Remitted to the Government
$1,300 - $300 - $325 = $675 remitted to the government.
Quick Accounting Method: In Ontario, the Quick Method rate is 8.8%. This rate is applied to the “total taxable supplies” (For Rideshare drivers, this is the total amount of gross fares). All provincial Quick Method rates can be found on CRA’s Quick Method Rates page. Each year, you are also entitled to a credit of 1% on the first $30,000 of revenue from your eligible supplies (including the GST/HST).
Using the Ontario Quick Method Rate, the driver is required to remit net tax of $994.40.
($10,000 + $1,300) X 0.088 - (1%*$11,300) = $881.40 remitted to the government.
CAN I CLAIM THESE EXPENSES BACK MORE FREQUENTLY? When you create your business Tax Account with the CRA, you can choose the cadence at which you file your returns. The more frequent you file taxes, the faster you will be able to claim back your expenses.
WHAT RESOURCES ARE AVAILABLE TO ME THROUGH UBER TO MANAGE MY TAXES?
There are additional tax resources that are available to you through Intuit, which is an Uber partner that provides several discounted products and services outlined below:
70% off Quickbooks to help you manage and track your income and expenses.
Up to 40% off TurboTax to help prepare and file your own tax returns next tax season!
Intuit has also prepared a comprehensive Tax Handbook to help answer any questions you may have around managing your taxes On a quarterly basis, Intuit will also host a webinar with tax professionals specifically for Uber drivers. Be on the lookout for an email to register for the next webinar!
WHY DO I NEED A GST/HST NUMBER? (Non-Quebec) The Canada Revenue Agency requires every driver to create a GST/HST account number, which must be added to your profile under invoice settings. This is a unique number that will identify your business to the government.
For more information on how to create your GST/HST account, please see the Step-By-Step Guide linked below
WHY DO I NEED GST/QST NUMBERS? (Quebec) Revenu Quebec requires every driver to create GST and QST tax numbers. These numbers must be provided to Uber to allow us to collect and remit the sales tax for each of your rides on your behalf.
For more information on how to create your GST/GST numbers, please see our Tax Information Webpage below.
WHAT ARE UBER’S TAX REGISTRATION NUMBERS? Uber Rasier Canada Inc. GST/HST: 764945663 RT0001 QST: 1228538970 TQ0001
WILL I STILL BE ABLE TO COMPLETE UBER EATS DELIVERIES? Yes, you will still be able to complete Uber Eats deliveries. For more information on how these changes may affect your work on the Uber Eats app, check out the resource below.
WHAT HAPPENS IF I MOVE PROVINCES? You must notify the CRA of your change of address.
DOES THIS IMPACT MY PRIOR TAX YEARS? This change is effective July 1, 2021 and only applies after that date.