What is ride-sharing?
Ride-sharing is an arrangement in which a passenger travels in a private vehicle, usually for a fee and arranged by means of a website or a mobile application (or “app”).
Ride-sharing is one of the largest segments of the emerging sharing economy in Canada.
Changes to the definition of a “taxi business”
Effective July 1, 2017, the definition of a “taxi business” for GST/HST purposes has been changed to include anyone who provides ride-sharing services.
Any transportation that is arranged for, or coordinated through an electronic platform or system, such as a mobile application or website, may fall under the CRA’s specific rules for taxi operators and commercial ride-sharing drivers.
These changes will not apply to a school transportation service for elementary or secondary students or a sightseeing service.
Tax obligations and driving a taxi
As an owner/driver participating in ride-sharing you must be aware of your tax obligations, whether ride-sharing is your only source of income or it is a part-time activity. Check our tax tip Involved in the sharing economy? Know your tax obligations! to get a better understanding of your tax obligations.
Regardless of how much time you spend driving your vehicle for fares, you are now considered to be a taxi in Canada. The GST/HST threshold of $30,000 in gross revenue does not apply and as such, all income earned from driving your taxi, including tips, must be reported on your income tax return and you must also collect and remit GST/HST on all fares.
For more detailed information consult the GST/HST and Commercial Ride-sharing Services infosheet.
Collecting and remitting GST/HST
As a participant in the sharing economy, you may be relying on an application (“app”) or website to collect your fares. It is your responsibility to ensure that you collect and remit GST/HST or that the application platform is collecting and remitting the GST/HST on your behalf.
Use the GST/HST calculator (and rates) to help you calculate the GST/HST you have to collect and remit.
It is important to understand your reporting obligations related to sharing economy revenues. Any amounts held back or deducted by the sharing economy platform may be considered as expenses that can be deducted from your income or eligible for an input tax credit for GST/HST purposes. Individual situations may vary.
It is important for you to understand your specific ride-sharing agreement. You may wish to retain a copy of that agreement for your records.
For more information
For more detailed information about your fiscal obligations and their implications, see the Checklist for new small businesses.
Questions about money earned through the sharing economy and its tax implications can be directed to the following:
Enquiries line at 1-800-959-5525.
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