GST/HST for Gig Drivers: What You Need to Know

If you are a gig driver offering ridesharing and/or delivery services, you may wonder if you require a GST/HST number. You may also wonder when to start collecting the applicable sales tax on your rides and orders. In addition, you may be unfamiliar with the registration process, calculation of net GST/HST remittance, and the associated filing deadlines. It can all be very overwhelming!

This article highlights the fundamentals of GST/HST for gig drivers and how you can report and file net sales taxes.

When is a GST/HST number required?

If you offer delivery or courier services, like Uber Eats, DoorDash, Instacart, SkipTheDishes, etc., you’re required to register for the GST/HST number only if your income earned in four consecutive calendar quarters or in a calendar quarter exceeds the small supplier limit of $30,000.

If you provide ridesharing services such as Uber or Lyft, you are required to collect GST/HST on your fares from the very first day of offering these services, regardless of your income.

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Signing up for your GST/HST number

If you meet the above criteria, you must report the GST/HST collected and charged on your rides or orders to the CRA. Reporting can be done annually, quarterly, or monthly, depending on their gross income.

Registration process

Registering for a GST/HST number can be done online, by mail, or over the phone.

Before you register via mail or phone, you will need information regarding your total annual income earned as a gig driver, the effective date of registration, the reporting period, and the fiscal year-end. Gather all of this information beforehand to expedite the process.

Here is a quick overview of each method of registration.

Online

To be eligible for the online registration process, you must have a valid Social Insurance Number (SIN), have previously filed income tax, and not have a current Business Number (BN).

• Use Business Registration Online (BRO) to sign up for a 9-digit BN and a 15-character GST/HST number online.
• Once the registration process is complete, you’ll receive your BN and GST/HST number in a BRO summary report.
• You’ll also receive a letter from the CRA confirming your GST/HST registration, the reporting requirements for GST/HST, and the effective date of registration, which is also the day you start offering taxable ridesharing or delivery services.

You need to register for your GST/HST within 30 days of your effective registration date. For example, if you provided your first ridesharing service on June 1 (your effective date of registration), you must register for your GST/HST number by June 30.

Phone

Another option is to register via phone by calling 1-800-959-5525.

You should have all your information handy for the questions provided in Part A of Form RC1. If you’re registered as a corporation, you need to provide a copy of the certificate of incorporation or amalgamation or the information requested in Part D of the form.

Mail

You can also choose to fill out Form RC1 and mail it to your nearest tax branch.

Collecting and charging GST/HST

Ridesharing drivers start collecting GST/HST from the first day of offering services. However, as a delivery driver, if your income exceeds $30,000 in the last four consecutive calendar quarters, you must start collecting GST/HST from the first day of the second month following your calendar quarter end in which you exceeded the $30,000 threshold.

Example

If you earned $2,000 in the first calendar quarter (January to March), $15,000 in the second quarter (April to June), $3,000 in the third quarter (July to September), and $11,000 in the fourth quarter (October to December), you are required to start collecting GST/HST on your rides or orders from January 1 of the following year.

GST/HST rates

The GST/HST rate will depend on the province where you provide services. For instance, if you offer ridesharing services in Alberta, you’ll collect a GST/HST rate of 5% on your rides. If it's in Ontario, the rate will be 13%. 

Though companies like Uber provide a separate GST/HST breakdown in their tax summary reports, you can even calculate it manually if you’re unsure of the GST/HST amount for a specific transaction.

Calculate the taxes simply by multiplying the total fare with the GST/HST charged in your province and dividing it by 100 + GST/HST. For example, if you provide a rideshare service for a fare of $50 in Ontario at 13%, you’ll collect and charge GST/HST of $5 ($50 x 13/113).

Reporting GST/HST to the CRA   

Once you’ve received your GST/HST number, you must report your net taxes by your return’s due date. The net taxes are the difference between GST/HST collected on fares and input tax credits (ITCs) in each reporting period.

Your ITCs are related to the taxes you pay on deductible business expenses (gas, repairs and maintenance, and buying or leasing a vehicle). You can use these credits to reduce your net taxes payable.

You will typically be assigned an annual reporting period to file your taxes. However, you can opt for a monthly or quarterly reporting period by making an election through My Business account, or filling out form GST20.

How to calculate net GST/HST remittance

If your GST/HST collected exceeds your ITCs for business expenses, the difference is considered a net tax and should be remitted to the CRA. You can use either of these methods to get your net tax amount:

Regular method

With this method, you simply need to deduct your ITCs from the GST/HST collected or collectible on your fares or orders, then pay the net amount to the CRA. Always keep your receipts for the GST/HST paid on business expenses for prospective CRA audits.

Quick method

This method is straightforward and doesn’t require you to keep any receipts for business expenses. Apply the applicable reduced rate of GST/HST directly to your annual income (including GST/HST) to calculate the net taxes payable. If you’re considering using this method, you can file an election online or by filling out Form GST74.

GST/HST Filing deadlines

Both your GST/HST reporting and filing deadlines are based on your reporting period. Most people opt for annual reporting, but you can elect to file monthly or quarterly based on your income.

For self-employed individuals with an annual reporting period and fiscal year end of December 31, the filing deadline is June 15. However, you must submit GST/HST to the CRA latest by April 30.

If your reporting period is monthly or quarterly, the filing deadlines are due within one month of the end of the period.

For any other cases, the filing deadline is three months following the end of your fiscal year.

Quarterly instalment payments

You must make quarterly instalment payments if you meet the following criteria:

• You must have an annual reporting period.
• You paid a net tax of $3,000 ($1,800 for Quebec) or more in the previous year.
• You expect to exceed a net tax of $3,000 ($1,800 for Quebec) or more in the current year.

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