HST for rideshare drivers in Ontario

You must register from your first fare

Since July 1, 2017, CRA treats self-employed drivers who provide commercial ride-sharing services as carrying on a taxi business. Taxi businesses are not eligible for the small supplier exemption, so you must register for GST/HST before you start, whatever your sales. Your registration is effective from the day you first provide a taxable ride. Source: CRA GI-196 and CRA's sharing economy page.

What about your other self-employed income?

GI-196 has a special rule for drivers who also run another small business. If your total taxable sales, including fares, are $30,000 or less, your registration covers only the ride-sharing. You do not charge HST on, or claim input tax credits for, your other business. Once total taxable sales go over $30,000, the registration covers all of your taxable activities.

How much of each fare is HST?

For rides in Ontario the HST rate is 13%, and it is usually included in the fare the rider pays. To find the tax inside a tax-included amount, multiply by 13/113. On a $20.00 fare that is $2.30 of HST, leaving $17.70 of fare before tax. Check your driver statements to see how fares and HST are shown.

Regular method or Quick Method?

Drivers can use either method. RC4058 lists taxi drivers among the businesses that use the services rate, which is 8.8% of tax-included fares for a permanent establishment in Ontario. Fuel, maintenance, phone and app fees can carry HST, so drivers with high expenses should compare both methods carefully. Under the Quick Method you can still claim ITCs on a vehicle you buy as a capital asset, subject to the usual rules.

Worked example: a part-time driver

If the HST you paid on everyday expenses such as fuel, repairs and phone is less than $1,046.50, the Quick Method leaves you with more. If you paid more HST than that, the regular method is better. Remember the Quick Method usually requires 365 days in business before the reporting period it starts in, unless you are a new registrant who expects $400,000 or less in your first full year.

Keep good records

Keep trip statements, fuel and repair receipts, and a mileage log for six years. They support both your HST return and the vehicle expenses you claim on your income tax return.