On July 1, 2017, the Government of Canada introduced new tax rules for rideshares, so that all ride fares also include HST. HST, or harmonized sales tax, is a Canadian “consumption tax” charged on top of certain goods and services. In Ontario, the HST rate is 13%.
Riders pay HST on all rideshare fares. So, if a ride had a $10 fare, the rider would pay the driver $10 plus an additional 13% (or $1.30) in HST, for a total cost of $11.30 paid by the rider to the driver.
As a rideshare driver with Taxify, you are considered an independent contractor. Unlike other forms of employment, independent contractors do not have tax deducted from their pay at source. In other words, as an independent contractor rideshare driver, you will receive the entire fare paid by the rider, including taxes. You are responsible for paying (or remitting) these taxes back to the CRA.
What does this mean for me, as a Taxify Partner?
In addition to your earnings, you will receive the HST paid by your riders on each of your weekly payouts, and this amount will be shown on your Taxify weekly balance reports. As an independent contractor, it is your responsibility to pay (or remit) the HST you collect on all of your rideshare earnings to the CRA. This HST is calculated on top of the overall ride’s fare.
This does not affect your earnings. HST is charged on top of your earnings and is paid by the rider. It is your responsibility to collect this and remit (or pay) it to the government.
How do I pay HST to the CRA?
As a Taxify Partner, you are providing what the CRA calls “taxable supplies” and thus you are required to have a GST/HST account. A GST/HST account is what you will use to pay the HST you collect on your rideshare earnings to the CRA.
Already driving with another rideshare company?
You can use the same GST/HST account to file your Taxify GST/HST return.
New to ridesharing?
You’ll need to register for a GST/HST account within 30 days of completing your first ride.
How do I register for a GST/HST account?
To register for a GST/HST account, you must first register for a business number - complete your business number (BN) application. The CRA has provided a comprehensive guide for rideshare drivers registering for their GST/HST accounts.
For the Business Number registration process, you would need to have:
- Your legal name (as it appears on your Canadian-issued identification)
- Your Canadian Social Insurance Number (SIN)
- Your date of birth
- The postal code on your last tax return (this may be the same as your current postal code)
- Your mailing address
- Your phone number
- “I am using the business number for”: Business - Sole Proprietorship
- “Major activity of this business”: Commercial ride-sharing service
When you reach the 'Register client - summary' page, select “Register CRA accounts for this business” to begin the GST/HST registration process.
Have the following information handy:
- Your Canadian Social Insurance Number (SIN)
- Type of business: “Operate a taxi, limousine or commercial ride-sharing service”
- Sole activity subject to the GST/HST is from commercial rental income? No
- Actual annual worldwide and domestic GST/HST taxable sales: 0
- Actual annual domestic GST/HST taxable sales: 0
- Account effective date: The date you complete your first rideshare trip
- Reporting period: Annually
When you have confirmed all your information, you will receive your 15-digit GST/HST account number. This is what you will use to remit the HST you collect on your rideshare earnings.
What will my Taxify earnings statements look like?
Rider receipts will show all fares, fees, and taxes the rider pays for taking a Taxify trip with you. HST is calculated as an additional 13% charge on top of the ride’s fare. All of these values will be shown on your Taxify weekly balance reports.
What do I get to keep?
- Base fare
- Per minute
- Per km
- Bonus earnings
What does Taxify keep?
- Booking fee: We use this to pay municipal fees and other payments required to keep partners on the road.
What do I have to pay to the CRA?
- Calculated on top of the entire ride fare (including tolls and booking fee)
- Calculated on bonus earnings
Why am I paying HST on tolls and booking fees?
This is part of our Taxify “service fee”- this reflects a commission we use to keep improving our platform, growing our rider base, and continually improving the services we provide to you, our Partners.
How can I keep track of the HST I owe to the CRA?
As a rideshare driver, you must remit (or pay) the HST you received on all rideshare earnings to the CRA. Your Taxify weekly balance reports will tell you exactly how much you earned that week, including the HST that you’ll need to later pay the CRA. We’ll also send you a yearly statement at the end of the tax year (in December), which will show how much HST you collected throughout the year. You can remit HST to the CRA quarterly (once every three months) or annually (once a year) - a tax professional can help you figure out the best option for you.
Tip: The earlier you find a tax professional, the better - a tax professional can help you understand how HST payments work, and how you as an independent contractor should manage your rideshare earnings. You may be eligible for tax deductions, which will help you recover some of the GST/HST you pay.
What are input tax credits?
Input tax credits (ITCs) are credits that may be claimed on certain tax returns. ITCs help covers the GST/HST you as a driver pays to the CRA, to cover the cost of purchases and expenses related to your business as a rideshare driver, such as gas, car repairs, and maintenance.
Individuals registered for GST/HST accounts (like Taxify Partners) may be able to claim ITCs when they file their tax return. A tax professional can help you learn all about any ITCs you may be eligible for, including which receipts or records you should keep for claiming these credits (tip: hold on to all car-related receipts). We suggest finding a tax professional early on, for advice on how to best manage your tax return. You can read more on the CRA’s ITC information page.