Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
Place de Ville, Tower A, 5th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 221226
Business Number: […]
Dear [Client]:
Subject: GST/HST INTERPRETATION
Application of the GST/HST to commercial ride-sharing services
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to commercial ride-sharing services. We apologize for the delay in this response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand the following from your correspondence of [mm/dd/yyyy]:
1) You are registered for GST/HST purposes as a sole proprietorship with effective date of [mm/dd/yyyy], and Business Number […].
2) You began providing commercial ride-sharing services […] in [yyyy]. […].
3) You also provide […][other supplies].
4) Your total income from the commercial ride-sharing services is below the $30,000 threshold for [yyyy].
INTERPRETATION REQUESTED
You would like to know if you were required to charge and collect the HST on fares charged to riders for your supply of commercial ride-sharing services through the […] mobile application.
INTERPRETATION GIVEN
Under subsection 240(1), every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is generally required to be registered for GST/HST purposes.
An exception to this requirement to register is when the person is a small supplier. In general, section 148 provides that a person is a small supplier if the total value of the consideration for worldwide taxable supplies, including zero-rated supplies, made by the person (or an associate of the person), that became due, or was paid without becoming due, does not exceed $30,000 in any single calendar quarter and in the last four consecutive calendar quarters.
However, subsection 240(1.1) states that every small supplier who carries on a taxi business is required to be registered in respect of that business. Effective July 1, 2017, the taxi business definition under subsection 123(1) was amended to include persons carrying on a business of transporting passengers for fares by motor vehicle within a municipality and its environs if the transportation is arranged or coordinated through an electronic platform or system, such as a mobile application or website. Self-employed commercial ride-sharing drivers are considered to be making such supplies once they start providing commercial ride-sharing services.
It should also be noted that where a supplier of a taxi business (including commercial ride-sharing services) has other revenue from taxable supplies (including zero-rated supplies) and is a small supplier, the registration is generally restricted to apply only to the supplies made in the course of the taxi business and not to the other taxable supplies unless requested otherwise by the supplier.
Section 165 specifies that every recipient of a taxable supply made in Canada must pay the GST/HST at the applicable rate for the province in which the supply is made, calculated on the value of the consideration for the supply. The GST/HST is usually included in the fares collected from commercial ride-sharing services.
In conjunction with subsection 221(1), subsection 225(1) provides that a person is required to collect tax in respect of any taxable supplies (other than zero-rated supplies) made by the person and account for any tax collectible or collected by the person when determining the person's net tax for a particular GST/HST reporting period of the person.
The net tax for a reporting period is generally the difference between the tax collectible or collected during the reporting period (and all other amounts that must be added to the net tax for the reporting period) and any ITCs that are claimed in the return for the reporting period as well as any other amounts that may be deducted from that net tax and are deducted in the return.
Therefore, GST/HST that was charged and collected should have been added into the net tax calculation for a particular reporting period and if it was a positive amount, you were required to remit that amount to the Receiver General generally not later than the last day for filing the return in question.
For more information on how the GST/HST applies to supplies of commercial ride-sharing services, please refer to GST/HST Info Sheet GI-196, GST/HST and Commercial Ride-sharing Services.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 819-665-5612. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Oswald Agossou
Rulings Officer
Services and Intangibles Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
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