Uber Drivers and Canadian Income Tax and HST – FAQ

Does an Uber Driver Have to Register for HST

If an Uber driver bills more than $30,000 in a calendar year they they have to register for HST, collect HST from Uber clients and remit the taxes to CRA. If you register for HST you are allowed to deduct the HST that you pay for direct expenses and only remit the net amount to CRA. Note that the $30,000 threshold applies to earnings from all sources, not just Uber fares.

Uber Collects the Fares and Does not Pay HST to the Uber Driver

Uber Canada makes a weekly deposit to your bank account of the fares it has collected for Canadian Uber operators. This amount includes HST for those drivers who are required to be HST registrants. This means that the gross deposit that an HST registered Uber driver receive includes an amount for HST. So if you receive a $100 deposit then $88.50 belongs to you as fare income and the balance is HST. You calculate the fare amount in Ontario by dividing the gross deposit by 1.13 and difference is the gross HST liability. You can deduct the HST you pay on expenses (input tax credits) from the HST collected, and the difference is remitted to CRA.

How Often Does an Uber Driver Have to File HST Returns

The frequency of filing depends on the annual billings. In most cases Uber drivers will have to file GST tax returns on an annual basis, but if they have high billings they might have to file on a quarterly or even monthly basis..

Does a Part Time Uber Driver Have to Declare Uber Fares

All income has to be reported for Canadian income tax purposes. The full or part time status of an Uber operator does not affect the requirement to report all Uber income on a Canadian tax return.

What Expenses can an Uber Driver Deduct for Canadian Income Tax

All expenses directly related to operation of the Uber vehicle can be deducted. This includes gasoline, insurance, repairs and maintenance, license fees and tires. If the vehicle is used only part time for Uber fares then the Uber driver has to keep a log showing personal use. Uber will provide details of Uber fares. The total car expenses will then be allocated between the deductible Uber expenses and the non-deductible personal expenses.

What Happens if an Uber Driver Did Not Declare Uber Income or Charge HST

Failure to declare Uber income on a Canadian tax return is tax fraud and the Uber driver can be charged with tax evasion. A conviction for tax evasion has a penalty of between 50% and 200% of taxes evaded plus possible jail time. In addition there are civil penalties plus interest.

Can an Uber Driver Avoid Prosecution for Tax Evasion and Civil Penalties

Provided the Uber driver does a voluntary disclosure or tax amnesty application to CRA before any contact by CRA there will be no income tax prosecution for unreported income and no income tax civil penalties and there may be an interest reduction on the taxes owing. The voluntary disclosure process is also kept confidential by CRA, unlike the case of a prosecution for income tax evasion where CRA seeks maximum possible publicity.

What Should An Uber Driver Do If He Has Unreported Income or HST

Uber drivers with unreported HST or unreport income should contact one of our experienced Canadian voluntary disclosure income tax lawyers who will submit a voluntary disclosure (VDP) application on behalf of the Uber driver. As soon as the voluntary disclosure application is submitted the Uber driver is fully protected against tax prosecution and civil income tax penalties. Read more.

Disclaimer:

"These articles provide information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All uber tax deduction situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer.

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