Uber Tax Canada: GST/HST Requirements Explained

Driving for Uber gives you flexibility and extra income. But it also comes with tax responsibilities. Understanding Uber tax Canada rules helps you avoid penalties and keep more money in your pocket. This guide breaks down everything you need to know about GST/HST requirements.

Many new drivers get confused about taxes. The good news is that once you understand the basics, managing your taxes becomes much simpler. Let’s walk through what you need to know.

Why Uber Drivers Must Register for GST/HST

When you drive for Uber in Canada, you’re not an employee. You’re self-employed. The Canada Revenue Agency treats you like a taxi driver. This means special rules apply to you.

All rideshare drivers must register for GST/HST. This rule applies from day one. It doesn’t matter how much you earn. Even if you only drive once a week, you still need to register. The CRA requires this within 30 days of your first trip.

This is different from food delivery drivers. Uber Eats drivers only need to register after earning $30,000 in a year. But rideshare drivers face stricter rules. The government changed these rules in 2017 to make things fair for taxi drivers.

Your GST/HST number is a 15-digit code. Uber needs this number on file. Without it, they may pause your account. Getting your number is quick and free. You can do it online in minutes.

How GST/HST Works for Uber Drivers

GST/HST gets added to every fare you collect. The rate depends on your province. Ontario charges 13% HST. Alberta charges 5% GST. British Columbia and Manitoba also charge 5% GST.

Uber automatically adds this tax to passenger fares. You don’t calculate it yourself. The app does it for you. Each week, Uber deposits your earnings plus the GST/HST collected. This money sits in your account temporarily.

Here’s the important part. That GST/HST money doesn’t belong to you. It belongs to the government. You’re just holding it until you file your return. Think of yourself as a tax collector. You collect it from passengers and send it to CRA.

When you income tax file return each year, you also deal with GST/HST separately. These are two different processes. Your income tax covers your earnings. Your GST/HST return covers the sales tax you collected.

Input Tax Credits

Input Tax Credits (ITCs) are your friend. They help you reduce what you owe to CRA. Here’s how they work.

Every time you buy something for your business, you pay GST/HST. Gas, car repairs, insurance, phone bills. All these expenses include tax. You can claim that tax back through ITCs.

Let’s say you collected $2,000 in GST/HST from fares. You paid $800 in GST/HST on business expenses. Your net tax owing is only $1,200. You subtract your ITCs from what you collected. Then you only pay the difference.

This is why keeping receipts matters. Every receipt shows the GST/HST you paid. Without receipts, you can’t claim ITCs. You end up paying more than necessary. Smart drivers save every business-related receipt.

Filing Your GST/HST Returns

Most Uber drivers file annually. If you earn less than $1.5 million yearly, you qualify for annual filing. Drivers who earn more might file quarterly or monthly.

You can file your GST/HST return online through CRA’s My Account. You’ll need your business number and GST/HST account number. The process walks you through each step. You report total GST/HST collected. Then you report your ITCs. The system calculates what you owe.

Uber provides a tax summary each year. This document shows all your earnings and GST/HST collected. You can download it from your driver dashboard. This summary makes filing much easier. All the numbers you need are right there.

When you income tax file return, you’ll also complete Form T2125. This form reports your business income and expenses. It’s separate from your GST/HST return. Both need to be filed correctly to stay compliant.

What Happens If You Don’t Register

Skipping GST/HST registration is illegal. The penalties are serious. CRA can charge you for all uncollected GST/HST. They add penalties on top. Interest charges pile up too.

Some drivers think CRA won’t notice. That’s wrong. Uber reports to CRA. The government knows you’re driving. They know your earnings. Not registering just delays the problem.

If you forgot to register, fix it now. CRA has a voluntary disclosure program. Coming forward voluntarily reduces penalties. You might avoid prosecution entirely. Waiting until CRA contacts you makes everything worse.

Consider hiring help. Many accountants specialize in Uber tax Canada matters. They know the rules inside out. They find deductions you might miss. The cost often pays for itself through tax savings.