GST/HST information for taxi operators and commercial ride-sharing drivers

Notice to reader

A driver who supplies taxable commercial ride-sharing services on or after July 1, 2017, is deemed to be a taxi business for GST/HST purposes. Such drivers must register for the GST/HST and charge it on their fares in the same way as taxi operators.


GST/HST for taxi operators and commercial ride-sharing drivers

As a GST/HST registrant, you usually have to collect the GST/HST on amounts you charge for taxable supplies of property and services. However, in the case of a passenger transportation service supplied by a taxi operator or a commercial ride-sharing driver, tax is usually already included in the fares. For more information, see How to calculate the GST/HST included in a fare.

Examples of amounts charged by a taxi operator or a commercial ride-sharing driver 

The following are examples of amounts charged by a taxi operator or a commercial ride-sharing driver:

  • metered taxi and limousine fares
  • flat rates charged for transporting passengers by taxi and limousine
  • fees charged for leasing a vehicle to a driver
  • fees charged by taxi licence owners for the use of their taxi licence
  • dispatch fees charged by a taxi stand to a driver
  • related charges such as waiting time, parcel delivery, and transportation of luggage

As a GST/HST registrant, you can generally claim input tax credits (ITCs) to recover the GST/HST paid or payable on your business purchases such as gas, car repairs, and car washes. You have to keep records of the amounts you pay or owe to support your ITC claims. For more information, see Input tax credits.

For more information, see the GST/HST Info Sheet GI-196, GST/HST and Commercial Ride-sharing Services.

You also have to fill out and file GST/HST returns according to your reporting period. This will be either annually, quarterly, or monthly.

When you fill out your GST/HST return, you can use either the regular method or the quick method to calculate your net tax. For more information on how to fill out your GST/HST return, see Complete and file a return – When to file.

Who needs to register for a GST/HST account

If you are a self-employed taxi operator or commercial ride-sharing driver who supplies taxable passenger transportation services, you must register for a GST/HST account even if you are a small supplier.

You are usually self-employed if you are in one of the following situations:

  • You own your taxicab or motor vehicle.
  • You lease a taxicab or motor vehicle from an owner for a flat fee, either on a daily, weekly, or monthly basis.
  • You lease a taxicab or motor vehicle from an owner for a percentage of fares.

If you are not sure whether you are self-employed or an employee, you can request a ruling from the CRA to determine your status by using Form CPT1, Request for a CPP/EI Ruling – Employee and Self-Employed?.

How to calculate the GST/HST included in a fare

The GST/HST is usually included in the fares for a passenger transportation service supplied by a taxi operator or commercial ride-sharing driver. For that reason, you may have to calculate the amount of GST/HST included in the fares.

Tax rate to apply depending on the trip
Where does the trip begin and end? Tax included in the fare
The trip begins in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, or Yukon and ends in Canada. GST
The trip begins in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, or Prince Edward Island and ends in Canada. HST
The trip begins anywhere in Canada and ends outside Canada. GST

To determine the amount of GST included in your fare, multiply the total fare by 5 and divide the result by 105.

To determine the amount of HST included in your fare:

  • for 13% HST, multiply the total fare by 13 and divide the result by 113
  • for 15% HST, multiply the total fare by 15 and divide the result by 115
Examples

Example 1
A taxi trip that begins and ends in Ontario is subject to the 13% HST.

Example 2
A taxi driver working in Manitoba charges a $35 fare for a trip. The GST included in the fare is equal to: ($35 x 5) ÷ 105 = $1.67.

Example 3
A taxi driver working in New Brunswick charges a $50 fare for a trip. The HST included in the fare is equal to: ($50 x 15) ÷ 115 = $6.52.

Example 4
A driver who provides commercial ride-sharing services in Ontario charges $20 fare for a trip. The HST included in the fare is equal to: ($20 x 13) ÷ 113 = $2.30.

For more details on the provincial GST/HST rates, see GST/HST calculator (and rates).

How to calculate ITCs

You can claim ITCs for the GST/HST paid or payable on your business purchases, such as:

  • gasoline, diesel fuel, and propane
  • vehicle repairs, maintenance, and washes
  • vehicle leases and purchases

You cannot claim ITCs for insurance costs or interest because they are not subject to the GST/HST.

You cannot claim ITCs on most of your business purchases if you use the quick method to calculate your net tax.

You may be able to use the simplified method for claiming ITCs.  For more information, see Calculate ITCs using the simplified method.

How to calculate the net tax

As a taxi operator or a commercial ride-sharing driver, you need to calculate your net tax to file your GST/HST return. There are two ways to calculate your net tax – the regular method and the quick method.

Regular method

If you use the regular method, you total the GST/HST you charged or collected and deduct your ITCs from this amount. The difference between these two amounts, including any adjustments, is your net tax. If you charged or collected more GST/HST than was paid or payable by you on your business purchases, you send the CRA the difference. If you charged or collected less GST/HST than was paid or payable by you, you can claim a refund.

To calculate ITCs, most small businesses can use the simplified method. For more information, see Calculate ITCs using the simplified method.

Quick method

The quick method is another method for calculating the net tax. You can use this method if your annual taxable sales, including those of your associates, are $400,000 or less (including GST/HST and zero-rated supplies) in any four consecutive fiscal quarters over the last five fiscal quarters. You can start or stop using the quick method at the beginning of any reporting period by submitting Form GST74, Election and Revocation of an Election to use the Quick Method of Accounting.

For more information on the net tax calculation, see Complete and file a return – Calculate the net tax.

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