Being an Uber driver in Canada is an exciting and empowering experience, as you are in control of your time, but in terms of taxes, you might be at sea with no sail. But take into account that you are virtually pushing a small business that is on wheels, which means you need to get familiar with the specific tax rules to maximize your earnings and keep everything above board with the CRA.
We have found all the drivers’ most frequently questions and brought them together in this guide – covering all the necessary information, such as filing requirements, tricky expenses deductions, Uber HST obligations, and many others. Consider this your most frequently asked questions handbook to help you with your Uber taxes in Canada for the 2024 tax year (filing in 2025).
Q1: What Does Being Self-Employed Mean for Uber Driver Taxes?
Being a self-employed Uber driver means you’re running your own business. Unlike employees who receive a T4 slip with taxes deducted, you need to:
- Keep track of all your income: Every dollar you earn from Uber counts as business income.
- Record all your business expenses: These are the costs that you incur to generate that revenue.
- Calculate your net profit (income minus expenses): This is the amount that will be taxed.
- Income tax and possibly GST/HST: You’ll pay these when you file your tax return.
The table below highlights the key differences:
Q2: How Do I Report Uber Income If I Also Have a T4 Job?
You’ll report all your income on one T1 Income Tax and Benefit Return. Your T4 income from your employer is included in the employment income section, while your Uber earnings and expenses are detailed on Form T2125 (Statement of Business or Professional Activities).
Q3: Do I need to file taxes if I only Drive for Uber a few times?
Even if you only made a few hundred dollars. In Canada, any income is taxable. For example, if you earned $2,500 from Uber Eats in 2024, you must report that on your 2024 tax return. Use Form T2125 to declare this as business income.
Q4: I Drive for Uber AND Lyft. Do I File Separately?
You can combine all your rideshare and delivery income into one T2125 if it’s similar work. However, if you are a freelancer (like a graphic designer or tutor), you’ll need separate T2125 forms for those.
Q5: Do Uber Drivers in Canada Need to Register for GST/HST?
Yes, the GST/HST rules differ significantly between Uber (ridesharing) and Uber Eats (delivery) drivers in many provinces, particularly Ontario.
- Uber (Ridesharing): If you transport passengers for Uber (UberX, UberXL, etc.), you are required to register for GST/HST from your very first dollar earned. This is because the CRA classifies these services as akin to taxi services, which have mandatory GST/HST registration. You’ll need to collect HST (e.g., 13% in Ontario) on your fares and remit it to the CRA, less any Input Tax Credits (ITCs) you can claim.
- Uber Eats (Delivery): For delivering food or parcels through Uber Eats, the mandatory GST/HST registration threshold is generally $30,000 in revenue within a calendar quarter or over four consecutive calendar quarters. However, you can choose to register voluntarily even if you haven’t reached this threshold, which can be beneficial for claiming Input tax credits (ITCs).
Q6: How Do I Register and File HST as an Uber Driver?
If you’re required (or choose) to register for GST/HST, you’ll need to apply for a GST/HST number through the CRA. You can do this online via the CRA’s My Business Account portal, by mail, or by phone. Once registered, you’ll typically need to file GST/HST returns either monthly, quarterly, or annually, depending on your assigned reporting period. The main form for filing your GST/HST return is Form GST34 (GST/HST Return for Registrants). Keep records of all taxable income and HST-paid expenses for claiming input tax credits.
Q7: What Tax Deductions Can Uber Drivers Claim in Canada?
As a self-employed Uber driver in Canada, you can deduct a variety of reasonable expenses you incur while earning your income. Here are some standard deductions you can take advantage of:
Vehicle Expenses:
- Gas/electricity
- Insurance
- Loan interest (not the principal part of your loan payments) or lease payments (with some limitations)
- Maintenance and repairs (oil changes, tires, etc.)
- Winter tires
- Cleaning supplies
In addition to vehicle-related costs, several other expenses are directly tied to your Uber business that you can deduct:
- Cell Phone Bills: The portion of your bill related to your Uber driving activities.
- Car Mounts and Accessories: Items you purchased specifically for your Uber business.
- Car Chargers: These are for your phone or an electric vehicle used for Uber.
- Certain App Subscriptions: If you pay for apps that help with your driving.
- Bottled Water for Passengers: A nice touch to enhance the rider experience.
- Car Detailing: To keep your vehicle presentable for passengers.
- Accounting and Legal Fees: Related to your Uber business.
- Business Insurance: Any specific insurance riders for ride-sharing.
Remember to track your kilometers to calculate your business-use percentage, and keep all your receipts in case the CRA wants to review your return.
Q8: How Can Uber Drivers Deduct Car Lease or Finance Payments?
When it comes to claiming vehicle expenses, the process varies depending on whether you lease or finance your vehicle:
- If you finance your vehicle, You can deduct the business portion of expenses like gas, maintenance, insurance, and the interest on your car loan. You can also claim Capital Cost Allowance (CCA), which accounts for the depreciation of your vehicle over time. CCA calculations can get tricky, so it’s a good idea to consult a tax professional. Be sure to keep your financing contracts and mileage logs handy.
- If you lease your vehicle, You can deduct the business portion of your lease payments. However, there are often restrictions on how much you can deduct for lease payments on more expensive vehicles. Make sure to keep your lease agreements and mileage records as well.
Q9: Can I Claim My Entire Lease Payment?
If you’re leasing a vehicle for your Uber business, you can deduct the portion of your lease payments related to business use. However, remember that the CRA has specific rules and limits on how much you can deduct, especially for pricier vehicles. The deductible amount is usually capped based on the manufacturer’s suggested retail price (MSRP) of the car. You’ll need to determine the allowable part of your lease payments based on how much you drive for business and ensure the vehicle’s original cost stays within the CRA’s limits. It’s essential to keep detailed lease agreements and mileage logs.
Q10: Can I Still Claim Expenses If I Lost Receipts as an Uber Driver?
You can still claim expenses even if you’ve misplaced some receipts, but you’ll need to back up your claims with sufficient documentation. If you’ve lost a few receipts, try to piece together the information using other records like bank statements, credit card statements, or any digital records you might have. For smaller expenses that are easy to lose receipts for (like cash purchases), jot down a detailed note of the date, amount, and what the expense was for. Remember, relying only on reconstructed information can be risky if you get audited. So, setting up a solid record-keeping system right from the start is essential to avoid these issues.
Q11: Do I Need Multiple T2125 Forms if I Work with Multiple Platforms (e.g., Uber, DoorDash)?
You don’t need separate T2125 forms for each platform. You can report all your income and expenses on a single T2125 form. Just make sure to separate the income from each platform within the form and accurately track the related expenses. Consider consulting a tax professional to ensure everything is reported correctly if your businesses differ.
Q12: What Are Red Flags for CRA Audits for Uber Drivers?
The CRA uses various methods to identify discrepancies and potential underreporting of income. For Uber drivers, they might cross-reference information provided by Uber with your reported income. Significant discrepancies between these sources are a major red flag and can trigger an audit. The CRA also looks for inconsistencies in expense claims, unusually high deduction amounts relative to income, and a lack of proper documentation. To survive a CRA audit, you need to have:
- Original Receipts: It’s not enough to have credit card statements; you need the actual proof of purchase.
- Detailed Mileage Logs: Separate your business mileage from personal trips.
- Clear Business Purpose: Keep documentation that explains how each expense is directly tied to your Uber driving.
- Separation of Personal and Business Finances: Using a separate bank account for your Uber income and expenses simplifies tracking and shows you mean business.
Q13: Do Uber Drivers in Canada Need a Business Number for Taxes?
You generally don’t need a separate business number to report your income tax as a self-employed Uber driver. Your Social Insurance Number (SIN) is used for your income tax return. However, if you must register for GST/HST (as most rideshare drivers are), you must obtain a GST/HST number from the CRA. This number is separate from your SIN.
Q14: Can I Write Off Traffic Tickets or Parking Tickets?
Generally speaking, no. Traffic tickets and parking fines are usually seen as personal expenses, even if they happened while you were driving for Uber. The CRA typically disallows deductions for expenses incurred due to illegal activities or violations of traffic laws. The purpose of the expense must be to earn income, and traffic violations don’t typically meet this criterion.
Q16: What Happens If I Make a Mistake on My Uber Tax Return?
Mistakes are a part of life, and tax returns are no exception. If you find yourself in a bit of a pickle, here’s what you can do:
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File an adjustment through CRA’s My Account or have your tax accountant help you with ReFILE.
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Use Form T1-ADJ (T1 Adjustment Request) to get the ball rolling.
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The CRA might reassess your return or ask for some documentation, so be prepared.
Taking action early can help you avoid penalties or interest charges.
Q17: How Often Do Uber Drivers Need to File GST/HST Return?
Well, it really depends on your CRA reporting period:
- Most small businesses file annually, which is the most common.
- Some may need to file quarterly.
- If your revenues are on the higher side, you might even have to file monthly.
And remember, even if you file annually, the CRA could still ask for quarterly installment payments if you owe more than $3,000 in GST/HST for the year.
Q18: How Do I Register for a GST/HST Number with CRA?
You have a few options:
- Register online through your CRA My Business Account.
- Give them a call at 1-800-959-5525.
- Or, if you prefer the old-school method, you can mail in the RC1 form.
Once you’re registered, you’ll need to file returns using Form GST34, which can be monthly, quarterly, or annually, depending on your reporting period.
Q19: Does Uber Issue a T4A Slip for Canadian Drivers?
Since Uber drivers are considered independent contractors, Uber doesn’t issue a T4 or T4A slip. Instead, you should:
- Log into the Uber Partner Dashboard.
- Download your Annual Tax Summary.
- Use that summary to report your gross income and any eligible expenses.
Q20: What Tax Records Do I Need to Keep?
The CRA requires you to hold onto records for six years, which includes:
- Mileage logs (keeping track of daily kilometers and distinguishing between business and personal use).
- Receipts for gas, repairs, and insurance.
- Phone bills and app receipts.
- Your Uber Tax Summary.
- HST return filings.
To help you stay organized, consider using apps like MileIQ or Zoombooks.
Final Thoughts
It can be challenging to understand what you must do to deal with your Uber driver taxes in Canada. But you have nothing to be afraid of! By taking care of your tax obligations, tracking your earnings and expenses, and familiarizing yourself with the requirements of GST/HST and the list of eligible deductions, you can file your taxes correctly, reduce your tax bill, and keep your relations with the CRA in good condition. If the whole thing appears to be overwhelming, don’t be reluctant to get in touch with a tax professional. An expert tax accountant who is an expert in the gig economy is the kind of person who can save your life. Do your driving wisely and handle your taxes with even more intelligence!
