GST/HST and Commercial Ride-sharing Services

GST/HST Info Sheet GI-196
June 2016

This info sheet provides self-employed commercial ride-sharing drivers with information regarding the proposed amendment to the GST/HST definition of "taxi business" in the Excise Tax Act that was announced in Budget 2017 on March 22, 2017, by the Minister of Finance. This amendment is included in Bill C-44, the Budget Implementation Act, 2017, No.1, which received Royal Assent on June 22, 2017.

Effective July 1, 2017, as a self-employed commercial ride-sharing driver who provides taxable supplies of ride-sharing services, you will be required to:

• register for the GST/HST, regardless of your total annual revenues from taxable supplies;
• charge and collect the GST/HST on the ride-sharing services;
• report the GST/HST; and
• remit the GST/HST.

In certain circumstances, some ride-sharing companies that you operate with and that you have duly authorized may agree to carry out some of these obligations on your behalf.

This publication explains these obligations and the various simplified GST/HST measures that are available to you including:

• registering online;
• filing and remitting annually and online;
• using the Quick Method to calculate your net tax if you meet the relevant conditions; and
• authorizing a representative to undertake your GST/HST obligations on your behalf.

Although these measures are optional, some ride-sharing companies that you operate with may require you to consent to using them.

Change to the definition of "taxi business"

For GST/HST purposes, a "taxi business" is currently defined as a business carried on in Canada of transporting passengers by taxi for fares that are regulated under the laws of Canada or a province.

Based on this definition, all taxi operators are required to register for the GST/HST and to charge and collect tax on their fares, regardless of whether their total annual revenues from taxable supplies exceed the $30,000 small supplier threshold.

To ensure that the GST/HST applies consistently to taxi services and commercial ride-sharing services, the definition of a taxi business has been amended effective July 1, 2017, to also 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.

The amended definition will only apply to taxable supplies of passenger transportation services that are made in the course of a commercial activity. You will be considered to be making such supplies once you start providing commercial ride-sharing services, including commercial carpool services. A commercial activity generally means a business carried on by a person (and in the case of an individual, carried on with a reasonable expectation of profit), except to the extent to which the business involves the making of exempt supplies by the person. Exempt supplies are supplies that are not subject to the GST/HST.

The amended definition will not apply to:

• the part of a business that is the operation of a sightseeing service or the school transportation of elementary or secondary students;
• a business or activity of a business that is prescribed by regulation (to date no businesses or activities have been prescribed);
• an exempt supply of a passenger transportation service such as a supply of a municipal transit service by a transit authority; or
• non-commercial ride-sharing, including non-commercial carpooling, that does not involve the making of taxable supplies.

For purposes of the amended definition, a "motor vehicle" means a motor vehicle that is designed or adapted primarily to carry individuals on highways and streets and that has a seating capacity for not more than the driver and eight passengers, and includes a motor vehicle:

• acquired primarily for use as a taxi, or
• of a type commonly called a van or pick-up truck, or a similar vehicle.

Registering for the GST/HST

As a self-employed driver making taxable supplies of commercial ride-sharing services you will be required to be registered for the GST/HST on July 1, 2017, in respect of those services. This is regardless of whether you are a small supplier. Generally, a small supplier refers to a person whose total revenue (along with the revenue of all persons associated with that person) from worldwide taxable supplies was equal to or less than $30,000 ($50,000 for public service bodies) in a calendar quarter and over the last four consecutive calendar quarters.

Although your effective date of registration will be the particular day on which you start to make taxable supplies, you will only be required to apply to the CRA for registration before the thirtieth day after that particular day. Therefore, if you are making taxable supplies of commercial ride-sharing services on July 1, 2017, you will be required to apply for registration by July 30, 2017, and your effective date of registration will be July 1, 2017. However, if you only start to make taxable supplies of commercial ride-sharing services after July 1, 2017, such as September 1, 2017, you will not be required to have registered for the GST/HST until September 30, 2017, and your effective date of registration will be September 1, 2017.

You are encouraged to register as soon as possible. When applying for registration, you may request that your registration only become effective as of the July 1, 2017 effective date of the amendment.

If you are a small supplier who makes taxable supplies of commercial ride-sharing services and other taxable supplies your registration will generally only apply in respect of your commercial ride-sharing services unless you request otherwise. This means that you will not be required to charge the GST/HST in respect of your other taxable supplies, nor will you be entitled to claim input tax credits (ITCs) in relation to those supplies (ITCs are explained later in this publication). However, if your combined total annual revenue from taxable supplies of commercial ride-sharing services and other taxable supplies exceeds $30,000 (for example, $20,000 for commercial ride-sharing services and $15,000 for other taxable supplies), you will not be considered a small supplier. You will therefore be required to charge and collect tax on all of your revenues from your taxable supplies (the combined $35,000).

If you are already registered for the GST/HST, including with respect to another commercial activity, you are automatically considered to be registered with respect to your commercial ride-sharing services and are not required to apply for registration again.

How to register

Business Registration Online

As a self-employed commercial ride-sharing driver, the simplest way for you to register for the GST/HST is to register electronically using Business Registration Online (BRO). Go to the Business Registration Online – Register now webpage and click on the blue "Register now" button. Then you will be asked to provide some specific information on the Business Registration Online – Before you register webpage. The Commercial Ride-sharing Services - Help with Registering for GST/HST webpage provides information to assist you in completing the online registration process.

Online registration eligibility conditions you need to meet are on the Business Registration Online – Eligibility webpage. You are eligible to register online for the GST/HST if you have:

• a valid social insurance number (SIN);
• filed an income tax return with the CRA; and
• not previously obtained a Business Number (BN). For more information see Guide RC2, The Business Number and Your Canada Revenue Agency Program Accounts.

You may not register online for the GST/HST if you have:

• an invalid SIN;
• never filed an income tax return with the CRA; or
• already obtained a BN.

After you register online, you will immediately receive a BRO summary providing you with your nine-digit BN and your 15-character GST/HST registration number. We will also send you a GST/HST registration confirmation letter that will include your effective date of registration and the GST/HST reporting requirements.

Other ways to register

You can also register by mail or fax by using Form RC1, Request for a Business Number and mailing or faxing it to your nearest tax services office or tax centre. If you already have a BN, you can register by using Form RC1A, Business Number - GST/HST Account Information.

You can register by phone by calling our Business Enquiries line at 1-800-959-5525 during our hours of telephone service. Before calling, be prepared to answer the questions in Part A of Form RC1, Request for a Business Number.

Before you register for the GST/HST by these other means, you will be required to provide some basic information, and the following specific information:

• total annual revenue from taxable supplies;
• fiscal year end;
• effective date of registration; and
• reporting periods.

Charging and collecting the GST/HST

Generally, as a GST/HST registrant (a person who is registered for the GST/HST or is required to be registered for the GST/HST), you must charge and collect the GST/HST on your fares for taxable supplies of commercial ride-sharing services. The rate of the GST/HST that you must charge and collect in respect of a commercial ride-sharing service depends on the province in which the supply is made, which is the province in which the ride-sharing service begins.

The GST/HST rates are as follows:

• 5% GST in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon,
• 13% HST in Ontario, and
• 15% HST in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island.

The GST/HST will typically be included in the amount of the fare charged for the commercial ride-sharing service. To calculate the amount of the GST/HST included in the fare:

• for 5% GST, multiply the total fare by 5 and divide the result by 105,
• for 13% HST, multiply the total fare by 13 and divide the result by 113, and
• for 15% HST, multiply the total fare by 15 and divide the result by 115.

As a GST/HST registrant, you must let your customers know that the GST/HST is being applied to your commercial ride-sharing services. You can do this in various ways such as using receipts, or by posting signs to inform your customers whether the GST/HST is included in the fare or added separately. If you issue a receipt, you have to show the total GST/HST rate or total tax payable that applies to the fare for your commercial ride-sharing services and either:

• that the total amount paid or payable for the service includes the GST/HST, or
• the amount of the GST/HST payable on the service separately from the amount paid or payable for the service.

Reporting the GST/HST

Filing GST/HST returns

Generally, as a GST/HST registrant, you are required to file a GST/HST return for each reporting period to report your net tax for that reporting period (and to remit your net tax by the due date of the return). Your reporting period therefore generally determines the frequency with which you are required to file GST/HST returns. For more information on the meaning of net tax, refer to the section entitled How to calculate your net tax in this publication.

When you register, we will assign you a reporting period based on your total annual revenue from taxable supplies. Generally, based on typical annual taxable revenues as a commercial ride-sharing service driver, you will be assigned an annual reporting period. However, you may choose at that time to have a monthly or quarterly reporting period.

You are required to file your GST/HST return by the due date which is also generally the date by which you are required to remit your net tax for the reporting period. The filing deadline for your GST/HST return depends on your reporting period. If you file:

• monthly or quarterly, your return is due one month after the end of the reporting period;
• annually and you are an individual with both a December 31 year end and business income for income tax purposes, your return is due by June 15; and
• annually except for an individual with a December 31 year end and business income for income tax purposes, your return is due three months after your fiscal year-end.

How to file your GST/HST returns

There are several methods you may use to file your GST/HST returns.

The fastest, easiest and most secure way for you to file your GST/HST returns is to file them online directly to the CRA using GST/HST NETFILE.

You can also file your GST/HST returns online through My Business Account, which is a secure online portal that allows you to interact electronically with CRA on various business accounts.

You can also file your GST/HST returns:

• in person at a participating financial institution along with a payment that you are making; or
• by mail by sending your paper GST/HST return to the address on the return.

For further information regarding the filing of returns, go to File a GST/HST return.

How to calculate your net tax

There are two ways that you can use to calculate your net tax for your reporting period in your GST/HST return – the regular method or the Quick Method.

Regular Method

If you use the regular method, you total the GST/HST collectible or collected by you during the reporting period and then deduct the GST/HST you are eligible to claim as ITCs and other deductions for the reporting period from this total amount. The difference between these two amounts, including any adjustments, is your net tax for the reporting period. Therefore, if the GST/HST collectible or collected by you is more than the GST/HST paid or payable by you that you are eligible to deduct (eligible ITCs and other deductions), you send us the difference.

As a GST/HST registrant, you are generally eligible to claim ITCs to recover the GST/HST paid or payable by you on taxable property and services to the extent that you acquired them for consumption, use or supply for the purpose of making taxable supplies for consideration (for example, taxable supplies of commercial ride-sharing services for which an amount is charged) where all other conditions for claiming an ITC are met. These inputs may include:

• gasoline, diesel fuel, and propane;
• vehicle repairs, maintenance, and washes; and
• vehicle leases and purchases.

An ITC cannot be claimed for the GST/HST paid or payable on property or services which you acquired for purposes other than making taxable supplies for consideration (for example, for personal use). If you acquire an input for the purpose of making taxable supplies for consideration and for other purposes, you are required to allocate the use of the input between these purposes in order to claim an ITC on the input.

Different ITC rules apply to services and non-capital property and to capital personal property. You must use the appropriate rules to calculate the ITC available on the acquisition of each property or service.

For additional information regarding ITCs, go to Input Tax Credits.

Quick Method

The Quick Method is a method of calculating your net tax that you may be eligible to elect to use if you meet the relevant conditions. The Quick Method can help you to reduce your paperwork and bookkeeping costs.

Generally, to calculate your net tax using this method, you simply multiply your taxable GST/HST-included supplies made during a reporting period by a Quick Method remittance rate. This rate is less than the GST/HST rate that you charge to reflect the fact that you cannot claim ITCs on most of your business purchases if you use the Quick Method.

Generally, you can elect to use this method if your total annual revenues from taxable supplies, including those of your associates, are no more than $400,000 (including the GST/HST and zero-rated supplies) in any four consecutive fiscal quarters over the last five fiscal quarters.

You can elect to use the Quick Method by using our online services at My Business Account or Represent a Client, or by completing and sending Form GST74, Election and Revocation of an Election to Use the Quick Method of Accounting to your tax services office. You can find the address at cra.gc.ca/tso or call 1-800-959-5525.

For more information refer to Guide RC4058, Quick Method of Accounting for GST/HST. For more information on the net tax calculation, see the Most Businesses section of the Calculate the net tax to complete a GST/HST return.

Remitting the GST/HST

Your net tax is generally required to be remitted by the due date of your GST/HST return.

If you file your GST/HST return monthly or quarterly, your remittance is due within one month after the end of your reporting period.

If you file your GST/HST return annually, have a December 31 year-end and business income for income tax purposes, your remittance is due by April 30. In any other case as an annual filer, your remittance is due within three months after the end of your reporting period.

If you are an annual filer and your net tax for the previous fiscal year was $3,000 or more, and your net tax for the current fiscal year is $3,000 or more, you have to make quarterly instalment payments during the current fiscal year, even if you have a rebate that reduces your amount owing to less than $3,000. If you do not remit instalments, you may incur penalty and interest. To calculate your instalment payments and view the related due dates, go to My Business Account.

These quarterly payments are due within one month after the end of each of your fiscal quarters and are usually equal to one quarter of your net tax from the previous year. You may also choose to base your quarterly instalment payments on an estimate of your net tax for the current year if you expect that your net tax for the current year will be less than it was for the previous year.

There are several methods you may use to remit the GST/HST. The simplest way is to remit electronically, which you can do in a variety of ways:

• You can remit electronically using your financial institution's online or telephone banking services.
• You can also pay electronically using the CRA's My Payment option, which allows individuals and businesses to make payments online from an account at a participating financial institution using the CRA website. For more information, go to My Payment.
• Another online option is to authorize the CRA to withdraw a pre-determined payment from your bank account to pay tax on a specific date or dates, which you can set up at My Business Account.

Authorizing a representative

You may authorize a representative to register, file, and remit on your behalf. For further information, go to Authorizing a representative.

Further information

Any legislative references in this publication are to the Excise Tax Act (the Act) unless otherwise specified. The information in this publication does not replace the law found in the Act and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the Act or relevant regulation, or call GST/HST Rulings at 1-800-959-8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

GST/HST Rates
Reference in this publication is made to supplies that are subject to the GST or the HST. 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%. If you are uncertain as to whether a supply is made in a participating province, see GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of Supply Rules for Determining Whether a Supply is Made in a Province.

Date modified:

2017-06-23