If you are interested in becoming a rideshare driver, you are probably wondering: How much do Uber drivers make? To understand how much you would make, you have to understand the basics of the business. Let’s go over the rates, you as an independent contractor, business expenses and taxes.
- How Much Do Rideshare Drivers Make?
- How Are Rideshare Drivers Paid?
- What Are The Rates?
- Working As An Independant Contractor
- What About The Taxes?
- HST / GST / QST & Business Registration
- Business Expenses
- How To Find Your Net Earnings
- Important Resources
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How Much Will I Make Driving For Uber Or Lyft?
Being a rideshare driver can be a great full-time or part time job. It certainly won’t make you rich but you can earn a comfortable living, or some extra spending cash if you just drive part-time.
The great thing about the way the rideshare market has developed is that there are no set hours or shifts, you go on and offline whenever you want and drive as much or as little as you want
Head to our Rideshare Rates and Requirements page to find what you need to get started!
How Much Do Uber Drivers Make: How Are Rideshare Drivers Paid?
As a rideshare driver, you are typically paid by distance travelled and time spent in trip. The following equation can be used to calculate how much your Transportation Network Company will pay you for a trip.
Rideshare Income = Base Fare + Distance + Time + Tips – Commission
Paid By Distance and Time
Each company, like Uber and Lyft, will set the rate you are paid (for example, $1 per
In addition to a per kilometre rate, you are also paid based on the time for the trip, so if you get stuck in traffic while on a trip, you will still make money (though much less).
Base Fares
Much like a taxi, there is a base fare for the trip. That means you get this amount plus the per km and per minute fees once you pick up the passenger. There are also minimum fares set so if you drive someone a block, that is the guaranteed amount you will be paid.
Each company will also provide you a cancellation fee if you are on route to pick up someone and they cancel the trip request after a certain amount of time
Waiting Fees
Dynamic Pricing
When there is high demand in an area, companies like Uber and Lyft charge surge pricing or Primetime pricing. As demand increases and there is a lack of drivers in an area, Uber & Lyft increase the prices to the customer and offer drivers Surge or Primetime bonuses for pickups in these areas.
Uber uses Surge Pricing which is basically a fare multiplier. For example, if your Surge is a 2.0, your fare doubles.
This is where the real money is to be made and also why it can be so difficult to approximate earnings. It depends on not only company, city, vehicle type as mentioned above, but the times you drive and when Surge or Primetime comes into play.
How Much Uber Drivers Make: What Are The Rates?
Some rideshare platforms have different rates, be sure to check out our rideshare rates and requirements
Calgary
Base Fare:
$2.00
Per Minute:
$0.23
Per Km:
$0.50
Cancellation Fee:
$4.00
Minimum Fare:
$3.25
Toronto
Base Fare:
$2.75
Per Minute:
$0.19
Per Km:
$0.75
Cancellation Fee:
$5.00
Minimum Fare:
$2.50
Montreal
Base Fare:
$1.90
Per Minute:
$0.19
Per Km:
$0.79
Cancellation Fee:
$5.00
Minimum Fare:
$6.80
Numbers reflect the rates of UberX or similar service.
Working As An Independent Contractor
When you drive for Uber you are an independent contractor and NOT an employee of the Uber. The same goes for Lyft and other rideshare platforms. As such, you are self-employed which comes with some perks and benefits.
A non-monetary benefit is that you can be your own boss, work whenever you want and however long you want
How Much Do Uber Drivers Make: What About The Taxes?
As a self-employed individual, you have to calculate and remit your own deductions to the government every year. This may include Federal and Provincial Income Tax, Canadian Pension Plan contributions (CPP) and depending on your province.
If you are an employee, the company you work for will give you a T4 after the end of the year detailing how much you made and what deductions they took off your pay and gave to the government. As a self-employed person (business) you need to keep track of all the money you received from driving and all the expenses related to your business.
Forms for Filing your Taxes
Because the rideshare company you work for did not deduct any taxes, you will need to calculate what your gross income was after deducting all your business expenses. Then, you will need to pay taxes on that amount. As an Uber Driver, you will need to prepare your own T2125 Statement of Business Activities which your accountant or tax software will prepare for you instead of plugging in numbers from your T4. In Quebec, you need to file Form TP-80-V Business or Professional Income and Expenses with Revenu Quebec as well as a return with the CRA. Use the Driver App or log-in online to get a copy of your tax summary. The tax summary shows you the your overall payout and a summary of your HST.
Make Your Taxes Easier With The Help Of An Accountant
Tip: Use a mileage tracker app or log book to keep track of the number of
kilometres you are driving personally, for Uber or for other business oremployment related activities. Record the number on your odometer at the start of the year and the end of the year.
Tip: Keep all of your receipts related to your car, cell phone and anything you buy that could be related to the business like water for passengers, phone chargers, and even your new snow brush!
Tip: Companies like Uber have partnerships with Tax Software Companies that offer Uber Drivers a special discount!
HST / GST / QST & Business Registration
Effective July 1, 2017, all rideshare drivers are required to register for an HST/GST number. This change groups rideshare drivers in with taxi drivers when it comes to HST/GST collection. Before you get your HST number, you will need to register as a business with the Canada Revenue Agency.
The Canada Revenue Agency provides more details on the HST/GST changes at their website.
Both Uber & Lyft have resources detailing these steps on their websites.
Deducting Taxes from Your Earnings
You may be wondering if this affects your earnings. The answer is yes. Now, every trip you drive with your rideshare company, they charge the customer HST/GST and pass the money off to you
Ontario is required to charge 13% HST on rides & Alberta 5% GST on rides.
Deducting Your Business Expenses
You don’t have to give the government the entire HST/GST amount though, as you are allowed to claim Input Tax Credits. This means that you take the amount of tax you paid on gas or other business expenses and deduct if from the amount of tax you collected for each trip.
Whatever the difference is, you give to the government. Ultimately, you will get to keep some of those taxes because almost everything (your biggest expense likely being gas) has GST/HST on it.
Rideshare drivers in Quebec including Montreal, Gatineau & Quebec City have different requirements. Once you sign up for Uber, they will send you a form to fill out for a GST & QST number if you don’t already have one. You allow Uber to collect the amount you owe when you complete the form. They pay this amount to the government on your behalf.
They will also use (and you consent to) the “quick accounting method” whereby you get an automatic 6% added to each and every pay for a sales tax rebate.
Don’t go at this alone.
At least for your first year and especially if you have another job or business, consult an accountant on how to prepare you taxes. After that, once you begin to learn how it works, you may even be able to do your own taxes using a self-file online software.
NOTE: If you also pick up an UberEATS delivery, there is NO HST charged. If you only deliver UberEATS, you don’t require an HST number at all.
Business Expenses
As a self-employed person, you can deduct your business expenses to lower your taxable income. Business expenses also play a large part in how much Uber drivers make. Let’s say you made $45 000 from driving Uber last year and all your expenses related to driving were $5 000. You would deduct your business expenses, $5 000, from your total income, $45 000, leaving you with $40 000 in taxable income. That means you pay less tax and could even lower the tax rate you pay depending on your income and the tax bracket you fall into.
So what type of expenses can you include as business expenses?
- Gas
- Maintenance costs, like oil changes
- Car repairs
- Cleaning supplies, services and car washes
- Cell phone and plan
- Insurance
- Financing or lease interest
- Purchase of your vehicle
- Snacks and water for your passengers
- Winter tires
Keep Track Of Your Mileage
Some of these things you can claim in full (like snacks for your passengers, but only if you don’t eat them first!) and some can only be claimed in part. This is why it is so important to keep track of your mileage.
For instance, if you drove 20Km last year and 10Km was while working for Uber, then you can only claim 50% of your expenses as business related. You should be keeping track of your kilometres in a logbook, a spreadsheet, or an app.
For expenses like your car and cell phone, there are equations to find out how much you can claim depending on how the CRA classifies. You can also claim a Capital Cost Allowance, whereby you claim a percentage of the cost each year.
Remember to keep all your receipts, NOT just your credit or debit card slip. You need the actual itemized receipt from the gas station, so the government can see that you didn’t sneak in some treats and claim it all as gas! You can buy items all on the same bill, you just have to separate those non-business (personal) expenses out come tax time.
Sound confusing? That’s because running a business is not an easy task. Please see an accountant or invest in a solid tax program to help you out come tax time!
How To Find Your Net Earnings
Often you will hear drivers “brag” about making $50/hour when there is surge pricing. Wow, you think, that is great! I should drop out of school or quit my job!
Don’t forget that there are a lot of expenses that go into driving for a living.
There is also the fun topic of “wear and tear” on your car, and the price of that in the long run. Like anything, the more you use your car the faster it is going to break down, you will spend more on repairs and as the kilometres add up , your car will depreciate in value.
So how do you find out what your “take home” pay is?
Take-home Pay = Income – Expenses – HST + Expense Claims + HST Input Credits – Taxes
Everyone’s personal financial situation is different and Uber pay varies depending on a few factors. Your location, hours driven, type of service (UberX, UberSelect, etc.) all play a part in your take-home pay. Keeping good records of your expenses and following this simple formula will help you understand your earnings.
Important Resources
You can call the Canada Revenue Agency for any questions: 1-800-959-5525.
- Sharing economy memo from CRA
- Lyft HST Instructions
- CRA HST Information for Rideshare Drivers
- Uber Tax Information Session Dates, Times & Locations
- Income Tax Information for Uber
- H&R Block Uber Partner Reporting Guide
About The Author: Commercial Driver HQ
Commercial Driver HQ strives to provide you with quality information about driving for a living. Whether you’re an Uber driver or a long haul trucker, we are here to help you succeed!
For everything rideshare and commercial driving, follow us at CDHQ!
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