IMPORTANT FACTS FOR CANADIAN UBER OPERATORS:
Are You an Employee or a Self-Employed Independent Contractor?
The question of whether a person is in a business relationship (self-employed independent contractor) or in an employee-employer relationship is not one that is always easy to answer. There have been many court cases on this subject. The courts generally look at the following criteria in making their decisions:
- Control – more control is generally exercised by an employer over an employee than by a client over a self-employed person.
- Chance of profit/risk of loss – self-employed persons usually have some degree of financial risk, and more opportunity for profit than employees
- Integration – an employee’s job will be an integral part of an employer’s business, where the tasks performed by a self-employed person will likely be less integrated with the client’s business
- Tools and equipment – self-employed persons are more likely to be supplying their own tools and equipment, as well as being responsible for their maintenance
FACT: Uber operators are self-employed sole-proprietors
- You do not have pay employment insurance (EI) premiums.
- Business Expenses can be deducted against Revenues to reduce taxable income.
- You have more freedom to choose your own working hours.
- You can work for more than one client
- There are greater opportunity for increased profits.
- can recover GST or HST paid by registering to collect GST/HST
Small Suppliers Who Must Register for GST/HST
A small supplier must register to collect GST or HST if they carry on a taxi business, according to section. 240(1.1) of the Excise Tax Act of Canada. This would also include Uber taxi drivers. The same is true of QST in Quebec.
- (1.1) Notwithstanding subsection (1), every small supplier who carries on a taxi business is required to be registered for the purposes of this Part in respect of that business.
- (2.1) A person required under any of subsections (1) to (1.2) to be registered must apply to the Minister for registration before the day that is 30 days after
- (a) in the case of a person required under subsection (1.1) to be registered in respect of a taxi business, the day the person first makes a taxable supply in Canada in the course of that business;
GST/HST Mandatory Registrations
The effective date of registration is the date:
- you provide taxable, including zero-rated, goods or services in Canada in the course of carrying on business in Canada, and your revenues exceed the small supplier threshold of $30,000 ($50,000 for charities or public service bodies) in a single calendar quarter – in this case you must charge the GST/HST on the supply that made you exceed $30,000, and register within 29 days from the day you cease to be a small supplier.
- you provide taxable, including zero-rated, goods or services in Canada in the course of carrying on business in Canada, and your revenues exceed the small supplier threshold of $30,000 ($50,000 for charities or public service bodies) in four consecutive calendar quarters – in this case you must charge the GST/HST at the beginning of the month after which you cease to be a small supplier, and register within 29 days after you make a sale other than as a small supplier;
- you begin to operate a taxi or limousine service. This applies to Uber Operators
- you, as a non-resident, charge admission directly to audiences in Canada.
FACT: All Uber operators in Canada must register for a GST/HST account within 30 days from the first day of conducting business as an Uber operator.
How Do I Register to Collect GST/HST?
You can register online, by phone, or by mail. If you don’t already have a business number (BN), you will have to register for one.
To register online, see the Canada Revenue Agency (CRA) Business Registration Online page. The online registration process asks for your personal information first, including your social insurance number, even though you may be registering a corporation. You will be asked if the business already has a business number. If it does not, you will go through the process of registering for a business number first.
You can register by phone for a business number or for CRA accounts (GST, income tax, payroll, etc.) by calling CRA at 1-800-959-5525
Registering for GST/HST in Quebec
To register online, go to the Revenu Quebec web page Register with Revenue Quebec.
To register by phone, call Revenu Quebec at 1-800-567-4692.
EXPENSES AVAILABLE TO SELF-EMPLOYED INDIVIDUALS
General Business Expenses:
- Accounting, legal, and consulting expenses
- Advertising and Promotion
- Bad debts
- Business-related memberships and subscriptions
- Continuing Education to improve business skills
- Delivery and freight
- Equipment rental
- Business Insurance
- Interest and bank charges
- Office expenses
- Property taxes or rent on business property
- Purchases of materials and supplies
- Subcontractors’ costs
- Traveling expenses
HOME OFFICE SPACE EXPENSES (PRORATED BY OFFICE SPACE square footage)
- Internet and WiFi
- Municipal Utilities (Water and Sewage)
- Mortgage Interest
- House Insurance
- Property Taxes
- Home Repairs & Maintenance Expenses
- Home Telephone Line
CAPITAL ASSETS (Used to determine depreciation expense and GST Input tax Credits)
- Work Vehicles
- Computer and Laptops
- Office Equipment
- Office Furniture & Fixtures
- Smartphones and Tablet
VEHICLE MILEAGE PRORATION
(Business Use/Total Kilometers Driven = % Vehicle Expense Allowance)
- Proration % Utilized to Claim GAS, Auto Repairs, and Insurance Expense
- Parking expenses are 100% deductible (no proration required)
So how does GST/HST work when I get paid by Uber?
After you have completed your fare, Uber takes a commission or processing fee and then pays you the net balance.
The net payment that is deposited into your account has GST/HST imbedded within that net payment. You can use our GST calculator to determine how much GST/HST you have collected by tallying all your net payments on a weekly, monthly, or on a year-to-date basis.
This is the breakdown:
Total Net payment from Uber = Sales Revenue + GST Collected
An Ontario uber driver who received total payments of $16,000.89 would have a breakdown that looks like this:
Total Net payment from Uber = Sales Revenue + HST Collected
$16,000.89 = $14,160.08 + $1,840.81
- Sales Revenue less Business Expenses = Net Income (Net Taxable Income).
- Net Taxable Income is used by your tax preparer or accountant to determine your personal income taxes owing from self-employment income.
- GST/HST Collected less GST/HST paid on Expenses = Net GST/HST Owing
When is my GST/HST reporting to the CRA due each year?
GST/HST periods for self-employed individuals are based on the calendar year which runs Jan 1st to Dec 31st. Once you have registered your GST/HST account, the CRA will send you a notice of when the deadline is to file your GST/HST return.
How can I track all the revenues and expenses from my business?
Download a free trial version of Pivot Accounting Pro.