Uber drivers are considered self-employed in Canada, otherwise known as an independent contractor. As such, Uber drivers must keep records of the money they receive from Uber, and all of their expenses so that they may prepare and file proper income tax returns each year. Because Uber drivers are independent contractors, they will not be issued a T4 slip.
When preparing and filing their tax returns, Uber drivers must complete a T2125. This form is known as a statement of business activities. It lists the income earned, and breaks down all of the expenses incurred in that year.
What Documentation will I need to Complete my Income Tax Return?
To complete your return, you will need to gather information with respect to your income, your expenses, and mileage driven. Furthermore, you will also require:
- Your Annual Tax Summary from Uber (found at: partners.uber.com);
- Receipts, bills and statements for all tax deductible expenses;
- Your vehicle mileage from the beginning of the year, the end of the year, and separated between personal and business kilometres driven;
- Your Social Insurance Number; and
- Any other tax documents and slips related to any other employment you may have.
What Expenses may I deduct?
You are able to deduct certain business expenses from your income to lower the overall amount of tax you will pay. Some examples include:
- Maintenance expenses (gas, oil, windshield washer fluid, new tires, tune-ups, etc.);
- Car washes;
- Vehicle insurance;
- Transponder for toll roads, tolls or parking costs;
- Cell phone expenses;
- Uber booking fees;
- Freebies for riders (water, candy, etc.);
- Cell phone mounts;
- Phone accessories (chargers, auxiliary cords and hands free headsets);
- Car loan interest; and
- Accountant or bookkeeping fees.
When are my Tax Returns Due?
Self-employed persons must file their returns by June 15 of each year.
I Filed my Taxes but Cannot afford to Pay CRA the Money I Owe
If you are unable to pay the taxes you owe, you are still better off filing the tax return rather than holding onto it. If you do not file, you will be hit with penalties, and then interest will be charged on the original amount you owe plus the penalties. Once you have filed your return, the CRA will expect you to pay the balance in full. If you cannot, the CRA will expect you to enter into a payment plan where you are likely paying an amount monthly towards your tax bill. If you are having trouble negotiating a collections repayment plan, call us today because we can help.
Uber drivers are currently being targeted by the Canada Revenue Agency because recently, the CRA received a vast amount of information from Uber. The information shows amounts paid to independent contractors, which the CRA then matches up to ensure the Uber driver reported the correct amount of income. If the numbers do not match up, an audit is commenced. If you are being audited, or need some assistance with your taxes, call us today!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.