Uber Driver

STARTING WORK AS AN UBER DRIVER

If you are thinking about to start work as an Uber driver then you should need to know a bit about the basic concept of this Gig economy, and income tax laws:

As an Uber driver, you are considering as a self-employed independent contractor for the Canadian income tax purposes and you have to report your income on Form T2125 business income statement.

BUSINESS NUMBER (BN) AND HST REGISTRATION

You need to get a business number from CRA and will have to register for GST/HST for tax purposes regardless of your gross revenue, because ride-sharing services are treated the same way as taxi businesses which means the small-supplier rules do not apply here.

You do not have to worry about the amount of GST/HST collected from your riders since Uber collects the GST/HST on your behalf and provide you with the weekly break-down thereof along with your payment statement and, or on your annual summary. However, as an Uber driver, it is your responsibility to file a GST/HST return and remit the taxes to the CRA.

As a registrant, you are allowed to deduct GST/HST that you pay for direct expenses for your business. This means you will only remit the net GST/HST amount to the Canada Revenue Agency.

FREQUENCY FOR GST/HST FILING

Once you are registered for the GST/HST, the CRA will assign you a reporting period for filing a GST/HST return. In most cases, this will be annual. However, drivers who are expecting to be in a refund position may want to file monthly or quarterly instead. You can do it by advising the CRA on My Business Account or by mailing a Form GST20, Election for GST/HST reporting period to your tax centre.

ANNUAL TAX SUMMARY

As an Uber driver, you should be familiar with Uber annual tax summary. A breakdown of your income from ride-sharing is provided on the left-hand side of the tax summary. All income in the left-hand column except tips and referrals or promotions should be reported as gross sales while tips and referral should be reported as other business income in the form T2125. The GST/HST must be included in gross sales and classified as a discount so that it cab be deducted accordingly.

BUSINESS EXPENSES

On annual summary, an offsetting deduction for fees and tolls which are identified as income but which Uber charges back to the Uber drivers, specifically:

• Split fare fees
• Airport fees
• Booking fees
• City fees
• Tolls

VEHICLE EXPENSES

You can claim your vehicle expenses in the same way as for other self-employed who use a vehicle for business. For the proper deduction of your vehicle expenses, you should maintain a logbook, whereas Uber classifies the trip mileage only that includes the travelled between the pick-up and the drop-off. It does not include the mileage travelled to get to the pick-up which is justifiable business usage as well. You must keep a record of your odometer reading at the beginning and end of the year in order to calculate the percentage of their total mileage used for business. The following expenses are typically be claimed:

Partially deductible expenses:

• Fuel (gasoline, oil, propane)
• Standard insurance
• Interest on car loan
• License & registration
• Leasing costs

General maintenance & repairs:

• Tires
• Service
• Car wash

Fully deductible Expenses:

• Repairs incurred for damage done while on business
• Parking while on business
• Supplementary business insurance
• Cost of cleaning up after passengers soil the vehicle
• Supplies i.e., bottled water, magazines etc. As long as it is not for your own use, this should be a reasonable expense. It would be subject to the typically 50% limitation for food and entertainment expenses.

BUSINESS-USE PORTION CELL PHONE EXPENSES

• Cost
• Airtime

OTHER EXPENSES

• Interior cleaning/repair
• Bookkeeping/tax return preparation
• Tax preparation fees charged in the previous year can be claimed in full as a business expense
• Uber service fees (From the Uber Tax Summary)

EXPENSES NOT-ALLOWED

These are the expenses which cannot be claimed like:

• Traffic tickets
• Clothing
• Haircuts
• Sunglasses
• Meals (unless you had a fare out of town and had to eat in a restaurant, in that case it would be subject to the 50%)

Disclaimer

This information page intended to provide for a general awareness only. This info does not take into account your personal set of circumstances and is not intended to be used without consultation from accounting and tax professionals. ZainTax Accounting & Tax Services Inc. will not be held responsible for any difficulties that occur from the usage of this information provided.