Self-employed cab drivers are required by the Canada Revenue Agency to register, collect and remit HST/GST from their fares to the government. This requirement does not correspond to a certain amount of money being made by cab drivers. Rather, if you drive a cab as a self-employed individual, you must be registered.
For others, the Canada Revenue Agency requires you to register for HST/GST when your sales total over $30,000.
Now we all know that Uber considers itself a technology company and not a cab company. Meaning it does not seem to have an opinion as to whether its drivers are required to register for HST/GST or not. This should be of great concern to the Federal government, anyone driving for Uber, and those who care about tax compliance.
Uber does not allow an individual driver to charge HST/GST above the fare charged by Uber. In addition, an Uber driver cannot collect cash from a passenger to pay any HST/GST amounts owing.
So what this means is that Uber drivers, if required to register for HST/GST, are actually being paid much less than they think.
For example, if an Uber driver makes $100 nightly driving for Uber, in reality, (in Ontario), the Uber driver has actually made $88.50 and $11.50 of HST/GST which must be remitted to the federal government.
If Uber drivers are not aware of this requirement they will not register for HST/GST, nor will they remit the money to the federal government. Once this occurs, the Uber driver may be audited in future, and penalized large amounts for failure to register and remit the proper amounts to the federal government.
If you are an Uber driver, and are worried about your obligations when it comes to tax compliance, please give Barrett Tax Law a call to see how we can help.