Table of Contents
Key Takeaways:
- Uber drivers are considered self-employed in Canada
- Self-employed individuals are subject to specific tax filing documents
- There are many deductible expenses that Uber drivers are eligible to claim, including mileage, accessories, insurance, etc.
- Uber drivers that make over $30,000 annually must file HST returns
- Talk to an expert accountant to ensure you meet all tax requirements of being an Uber driver
As a Canadian, you’re required by the Canada Revenue Agency (CRA) to file income taxes every year. Normally, your income tax is automatically deducted from the earnings you make throughout the year and summarized in a T4 slip that’s issued to you by your employer.
In Canada, when you drive with Uber, you are considered self-employed (or an independent contractor), and that means that it is your responsibility to keep records of your earnings through Uber, and all of your expenses so that you can file proper income tax returns each year.
In this article, we’ll go over everything you need to know to file your income tax as a Canadian Uber driver, including the documentation needed and where to find it, deductible expenses, and filing HST returns.
What documentation do I need to complete my tax return?
Unlike employees that must file a T4 form, Uber drivers must complete a T2125 form, also known as a statement of business activities. This T2125 lists all the income earned and breaks down all of the expenses incurred in that year.
Along with your T2125, you will need to submit the following:
- Your Annual Tax Summary from Uber (found at partners.uber.com or through the Driver Dashboard)
- Receipts, bills and statements for all tax deductible expenses
- Your vehicle mileage from the beginning of the year, the end of the year, and separated between personal and business kilometres driven
- Your Social Insurance Number
- Any other tax documents and slips related to any other employment you may have
That might seem like a lot, but all the documentation you need can be readily accessed through Uber. You can also work with your accountant to get copies of all the required forms. As a self-employed individual, you also have a bit more time to file your income tax returns (until June 15 every year).
What tax deductible expenses am I eligible for?
One of the key advantages of being self-employed is the ability to deduct business expenses from your income to lower the overall amount of tax owed. This includes:
- Mileage
- Maintenance expenses (gas, oil, windshield washer fluid, new tires, tune-ups, etc.)
- Car washes
- Vehicle insurance
- Transponder for toll roads, tolls or parking costs
- Cell phone expenses
- Uber booking fees
- Complementary products for riders (water, candy, etc.)
- Car accessories (cell phone mounts, dash-cams)
- Phone accessories (chargers, auxiliary cords and hands free headsets)
- Car loan interest
- Professional services (accountant or bookkeeping fees)
The best way to ensure that all your deductible expenses are included is to consult a tax accountant. FShad CPA Professional Corporation has a team of expert accountants that can review your unique tax situation and ensure you’re maximizing your tax deductible expenses.
Do I have to file HST returns?
This is something that is not as commonly known by Uber drivers but if your earnings exceed $30,000 a year across all income sources, you must register with the CRA to collect HST from Uber clients and remit the taxes to the CRA. If you register for HST, you are allowed to deduct the HST that you pay for direct expenses and only remit the net amount to CRA. Most Uber drivers that are required to file HST returns must do so annually, however, it may be more frequent based on drivers’ annual earnings.
Registering for an HST number can be done through the government’s online form, mail, telephone or fax. Your HST number will be specific for rideshare driving like Uber.
What happens if I can’t pay the amount owed to the CRA?
If you’re worried about filing your tax returns because you can’t afford to pay the taxes owed, know that you have options. Once you have filed your return, the CRA will expect you to pay the balance in full, but if that’s not possible, the CRA will expect you to enter into a payment plan where you are likely paying a monthly amount towards your tax bill.
It’s important to file your tax return even if you can’t pay taxes in full because it can result in heavy penalties that will be subject to interest. Failure to declare Uber income on a Canadian tax return can also be considered tax fraud and the Uber driver can be charged with tax evasion, which has heavy penalties and possible jail time.
In recent years, the CRA has paid close attention to the tax returns filed by Uber drivers because Uber has provided information that shows amounts paid to independent contractors. The CRA then matches that up with Uber drivers’ tax filings to ensure that the correct amount of income has been reported. If the numbers do not match up, you’ll get audited.
If you’re an Uber driver, it’s important to have an experienced accountant that is knowledgeable about the tax requirements of rideshare drivers.
FShad CPA Professional Corporation can work with you to ensure you’re claiming all your deductible expenses, as well as meeting all the tax requirements outlined by the CRA so that you don’t get audited or penalized.
Book a consultation today and get started with our team of expert accountants!
FShad CPA Professional Corporation
Call us at (844) 982-4700 or send us an email at info@shadcpa.ca
3850 Steeles Avenue West, Unit 10 – Suite 203, Woodbridge, ON, L4L 4Y6.
This publication is produced by FShad CPA Professional Corporation as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors. Your use of this document is at your own risk.
