Canadian Rideshare Taxes: GST, HST, QST for Uber and Lyft Drivers

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As an Uber & Lyft drivers you probably have a lot of questions about rideshare taxes. You should because you are actually self-employed, not an employee, and as an independent contractor you have a lot more to keep track of. Being your own boss has plenty of perks but it also comes with a lot more responsibility.

As of July 1, 2017 the Canada Revenue Agency (CRA) stated all rideshare services (Uber, Lyft) have to charge GST/HST on their services. So how does tax work for Uber drivers? If you are an Uber driver in Canada, whether it is Ontario, Quebec or Alberta, we explain how this affects you and what you need to know about GST/HST/QST as well try to answer some of your tax questions.

This is one post of a three part FAQ series we have put together for rideshare taxes. If you want to learn more you can find the links to other helpful tax advice at the bottom of the article under Helpful Rideshare Taxes Links.

The Basics

So you want to be an Uber driver, eh? Get out your #2 pencil and glasses because you are going to have to learn a little bit of the business end, including rideshare taxes.

I know it seems like a bit much so our best advice is to talk to a tax professional before you start driving so things will be easier when it comes to tax time.

uber and lyft rideshare taxes in canada

GST/HST/QST – What is the Difference?

Given that Uber was only operating in Alberta, Quebec & Ontario in 2017 we will just focus on them right now. They are pushing to move into Winnipeg but are having some difficulty sorting out the insurance framework. Anyways…

GST is a federal sales tax on most goods and services charged at 5% that applies across Canada generally.

HST is where provincial governments have merged their provincial tax with the federal tax and the CRA collects in on their behalf. Ontario is like this and charges its own 8% provincial tax, together with the 5% GST to make up the total HST of 13%.

In Alberta, there is no provincial sales tax so only 5% GST applies to Uber rides.

In Quebec, Revenu Quebec charges a provincial tax known as QST which is 9.975% charged on Uber rides plus the GST of 5%.

Do I need a GST/HST number if I make under $30,000?

Yes, as of July 1, 2017 all rideshare drivers in Canada are required to get a GST/HST number and charge it on each fare regardless of how much they make. 

Do I need a business number? Where do I get a business number?

Yes, you will need a business number. You will also need a business number in order to get your HST number, you can register online for a business number. Once you sign up you will get your business number and a confirmation letter will be mailed to you which you should keep for your records. You can register for both your HST and business number together.

Where do I register for an GST/HST number?

The easiest way to register for an HST number is online with the Canada Revenue Agency (CRA). You can also get an HST number by mail, fax or phone at 1-800-959-5525. For more detailed information on the forms and information you need visit their website. You have 30 days from the time you start driving to get one. In Quebec, you have to get these things before driving which you will do through the Uber office. 

What do I need to register for a business number or GST/HST number?

  • Your Social Insurance Number (SIN)
  • Your home and mailing address, including the postal code
  • The date you started driving with a commercial ride-sharing service
  • How much you anticipate earning

How do I collect the GST/HST/QST?

The sales tax will be charged on the fare and automatically passed on to your with your earnings. The rate that is charged depends on the province you are driver in. In Quebec, the tax is collected and paid by Uber so you don’t need to worry about collecting it. It works a little different with Lyft too, so we broke it down for you in our post Uber vs. Lyft: What is the difference in Driver Pay and Taxes.

Payment Info

So you got the money, now what? You have to remember most of the sales tax is the governments money, they just make you charge it and hold on to it for them until tax time. 

How do I pay the GST/HST?

The easiest and most popular ways are to pay online through you My Account with the CRA or at your financial situation. For more information and options to pay, see the CRA website. In Quebec Uber remits it directly to the government.

When do I have to pay and file my GST/HST or QST returns?

It depends on what you pick as your reporting period but usually rideshare drivers set up an annual reporting period. You can choose to file monthly or quarterly though when you are signing up.

If you signed up monthly or quarterly, you have to file your return and pay one month after the end of the reporting period. For example, if you are monthly then your March return is due by the end of April with payment. If you file quarterly, than it is due one month after then end of every quarter, so essentially every 3 months.

If you file annually then your return and payment is due 3 months after your fiscal year end. For example, if you set your fiscal year end to August 31, then your return and payment would be due November 30. There is an exception to this rule though.

If you selected December 31, then your return is due June 15, however any payment owing is due April 30. If you don’t pay on time there will be interest and penalties. This is similar to income taxes for businesses. You can check our article on income tax for rideshare drivers to learn more!

You can file your return online or by mail with the CRA or Revenu Quebec. In Quebec, you likely don’t need to pay anything because Uber has sent it in already.

Do I have to pay all the GST/HST to the government?

Nope! This is because you incurred various business expenses like gas, repairs, your phone, etc. throughout the year and had to pay GST/HST on them. These are called Input Tax Credits.

Basically, these offset each other depending on what method of calculation you use. So let’s say you collected $3,000 in GST/HST from Uber fares and paid $1,000 in GST/HST on various eligible business expenses, you send them the difference of $2,000. This is called the regular method.

Remember though you can only claim the portion of GST/HST on the expense for the business use. So if your car was used 25% of the time for Uber, then you can only claim 25% of the GST/HST you paid.

The Quick Method

The Quick Method is the other option and simpler. In order to find out how much GST/HST you need to pay to the government, you just multiply the amount you collected by a certain percentage set by the government depending on the good or service. 

In Quebec, the Quick Method is used and it makes your life much simpler. It is all collected and paid to the government by Uber and they give you approximately 6% back automatically. You still have to file your returns though! The rate is different between provinces if you use this method.

Here is more information on each of the methods from the CRA. You should ask a tax professional which method you should use.

If you want to “over-save” for the HST you can just set aside any you have collected from Uber or Lyft, then you once you calculate how many input tax credits you have, you can either use that other money to pay any other tax owing (like income tax or CPP) or it will seem like a “bonus” for all your hard work.

Rideshare Taxes Instalment Payments

Things can get more complicated if you have another job or are doing this full-time and killing it with your earnings. So what can happen after the first year of being self-employed?

Do I have to pay instalments for GST/HST?

As a new GST/HST registrant you may need to make instalment payments in 2018 if your net GST/HST tax is more than $3,000 for one year. If you already had a GST/HST number before becoming a rideshare driver you know the drill. For most rideshare drivers who weren’t already self-employed, they registered for an GST/HST number in 2017 when the government changed the rules. Effective July 1, 2017 all rideshare services were subject to GST/HST.

The $3,000 threshold isn’t how much GST/HST you collected from driving rideshare. It is the net amount which is the total you collected from Uber less any GST/HST you paid on things like gas, oil changes, etc. These are called input tax credits which we already talked about.

If that amount is more than $3,000 then you will have to pay instalment payments. If it is not, you are not out of the woods just yet. This is because as a new registrant, there wasn’t a full year where you were collecting GST/HST (as mentioned the CRA mandated it July 1, 2017). That means that you need to prorate the amount you collected.

Example

You chose to file your HST returns annually with a fiscal year end date of December 31. Let’s assume you started driving for Uber in 2016, with the new rules you start collecting GST/HST as of July 1, 2017. That means your filing period (between July 1-December 31) is only 184 days so we have to prorate it.

After doing you taxes you realized your net GST/HST owing was $2,200. We need to get an average of what that is per day.

$2,200 / 184 days =  $11.96 net tax per day

So let’s say you had collected and paid HST all year for 365 days.

$11.96 x 365 = $4,365.40.

Congratulations! You have to pay quarterly GST/HST instalment payments next year. Don’t worry, if you end up overpaying cause you want to work less you will get it back at the end of next year. If you still came out less then $3,000 when performing the above calculation then you don’t have to make instalment payments for the following year.

So my net tax is more than $3,000. Now what?

Well, not only do you owe $2,200 on April 30, 2018 for your 2017 net tax you also owe an instalment payment on the same day. To figure out how much that would be using the same figures, we just divide $2,200 by 4 = $550.

You will have to pay $550 for your first 2018 instalment payment on April 30 along with the $2,200 you owe from last year. You will then have to pay 3 more payments of $550 on July 31, October 31 and January 31 of the following year. Your instalment payments are due one month after each quarter. Don’t worry, when you file your taxes the government will be sure to remind you about this obligation.

How do I pay my GST/HST instalment payments?

The most common ways are with your bank in person or online. For all your options, click here.

What if I can’t afford my GST/HST instalment payments?

Interest and penalties may apply if you can’t make your instalment payments. The same goes for failing to file your GST/HST returns and pay any net tax owing.

Quebec

We already went over the different sales taxes where the big rideshare companies are but let’s look a bit closer at rideshare drivers in Quebec. Though Quebec has placed some of the most stringent requirements on rideshare drivers signing up compared to Ontario and Alberta, the way the sales tax works for rideshare drivers seems a little more straight forward.

quebec rideshare taxes QST Uber Lyft

How does QST work for Uber Drivers in Quebec?

In Quebec, you have to get a GST & QST number to drive with Uber first. When you sign up with Uber, you will get an e-mail requesting these numbers if you already have them. If you don’t then you can use the same form to get these numbers. Uber will forward your form to Revenu Quebec and they will mail you the GST and QST numbers.

Uber will collect the GST & QST on each fare for you and give it directly to the government. You will be responsible for filing a return every year though detailing this information.

Input Tax Credits in Quebec

You won’t be claiming Input Tax Credits every year for sales tax you paid on gas, car repairs, etc. Instead you will automatically receive approximately an extra 6% refund based on your weekly earnings from Uber. This is known as the quick accounting method and you are consenting (because you have to if you want to drive with Uber in Quebec) to using it. This actually makes your bookkeeping much easier.

If your only commercial activity is for Uber, refer to this Revenu Quebec resource for more information and to get line by line instructions to complete your HST/GST – QST Return. If you are already a self-employed person and also drive for Uber in Quebec, refer to Revenu Quebec’s resource on this type of situation.

Disclaimer

We are not professionals at this but we sure tried hard to gather the best information we could and consult with experts in the field. Nothing here should be taken as professional tax, legal or business advice. Every persons situation is unique and different. The government often changes rules and each province has their own requirements. You should consult with a tax and/or legal professional for advice and can also ask questions with your tax authority. 

If you do see something that doesn’t quite seem to hit the mark or have any ideas on how to make this information even better, please contact usand if you are a driver, we will feature your referral code on our site!

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Here are a few more awesome resources for completing your rideshare taxes!

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