Driving for Uber, Lyft, Uber Eats, DoorDash or a similar app makes you self-employed in the eyes of the Canada Revenue Agency. That brings a few tax rules many drivers don’t learn about until they get a letter from the CRA. Here’s what you need to know.
1. Rideshare drivers: register for GST/HST from your first fare
This is the rule that catches the most people. Most small businesses don’t have to register for GST/HST until they pass $30,000 in sales. Commercial ride-sharing drivers are different: like taxi drivers, you must register for a GST/HST account from the day you start giving rides, no matter how little you earn.
2. Delivery-only drivers: the $30,000 rule applies
If you only deliver food or packages and never carry passengers, the normal small-supplier rule applies: you generally don’t need to register until your taxable revenue passes $30,000. But if you’re already registered because you also drive rideshare, your delivery income is generally covered by that registration too. Mixed drivers should get advice on how to report both.
3. Report your income on the T2125
Your driving income and expenses go on Form T2125 (Statement of Business or Professional Activities) with your personal tax return. Report the gross fares or delivery fees the app pays you, not just what lands in your bank account after fees.
4. Claim the expenses you’re entitled to
- Vehicle expenses: fuel, insurance, maintenance and repairs, licence and registration, lease payments or capital cost allowance, and interest on a car loan.
- Business-use percentage: you can only claim the share of vehicle costs used for driving work, so a mileage log is essential.
- Other costs: platform fees, phone and data plan (business portion), car washes, and parking or tolls while working.
5. Keep records like a business
Keep your app summaries, receipts and mileage log for at least six years. If the CRA reviews your return, these records are what support your expense claims.
6. Plan for the tax bill
No tax is withheld from driving income, so set aside a portion of every payout for income tax, CPP contributions and GST/HST. As a self-employed person you have until June 15 to file, but any balance owing is due by April 30, and you may need to pay quarterly instalments once your tax owing grows.
Driving for an app and not sure you’re set up correctly? See our plans and pricing or contact Wealth Street Services. We’re in Brampton and serve clients across Canada.
Sources
- CRA: When to register for and start charging the GST/HST
- H&R Block Canada: Uber drivers and GST/HST
- Mondaq: Tax rules for rideshare and delivery drivers in Canada
- CRA: Important dates for individuals
This article is general information, not tax or financial advice. Rules and amounts change, so confirm details with the Canada Revenue Agency or speak with our team about your situation.
