What the CRA Said

Tax Obligations for Ridesharing and Delivery Service Drivers in Canada

Revised – Tax obligations for commercial ridesharing and delivery service

The Canada Revenue Agency (CRA) has released a revised guide on tax obligations for individuals involved in commercial ridesharing and delivery services within the platform economy, effective June 11, 2024. Here’s a summary of the key points:

Commercial Ridesharing

Definition and Tax Status

• Definition: Commercial ridesharing involves drivers providing passenger transportation services via apps like Uber and Lyft.
• Tax Status: Drivers are generally considered self-employed.

Income Tax Obligations

• All income, including tips, must be reported on the income tax return.
• Eligible business expenses can be claimed, such as platform fees and other costs related to earning income.

GST/HST Obligations

• Drivers must register for a GST/HST account upon starting ridesharing services.
• They must charge, collect, and remit GST/HST and can claim input tax credits on expenses incurred.

Delivery Services

Definition and Tax Status

• Definition: Delivery services involve self-employed drivers delivering goods through apps like UberEats and SkipTheDishes.
• Tax Status: Drivers are considered self-employed contractors.

Income Tax Obligations

• All income, including tips, must be reported on the income tax return.
• Eligible business expenses can be claimed, similar to ridesharing services.

GST/HST Obligations

• Drivers must register for a GST/HST account if earnings exceed $30,000 over four quarters. Optional registration is available for earnings below this threshold.
• Once registered, drivers must charge, collect, and remit GST/HST, and can claim input tax credits on related expenses.

Key Differences and Combined Services

Income Tax and GST/HST Requirements

• Rideshare and delivery service drivers must file income tax returns and report all income, claiming eligible expenses.
• Rideshare drivers must register for GST/HST from the start, while delivery drivers register upon exceeding the small supplier threshold.
• Combined service drivers must handle GST/HST for both activities, adhering to registration and remittance rules, and can claim input tax credits for expenses in both services.

Record Keeping and Correcting Tax Affairs

• Maintaining organized books and records is crucial for reporting income, GST/HST, and claiming expenses.
• Drivers who haven’t reported income or GST/HST previously may face penalties and interest. Voluntary disclosure can help reduce these penalties.

For further details, including registration and claiming input tax credits, refer to the CRA resources on taxes and the platform economy.

 

Top Business Tax Information Questions Answered by CRA

You’ve got questions and we’ve got answers!  Here are answers to seven of the top business tax information questions

The Canada Revenue Agency (CRA) has addressed seven frequently asked questions about business taxes in a recent update, providing vital information for business owners. Here’s a summary:

1. 2024 Tax Changes Affecting Businesses

Several key tax changes took effect on January 1, 2024:

• Mandatory electronic filing thresholds were adjusted.
• Electronic filing requirements for GST/HST registrants were modified.
• New reporting requirements for trusts were introduced.

For detailed information, refer to the CRA’s quick reference tax tip on these changes.

2. Registering for a Business Number (BN)

A BN is a 9-digit number unique to your business, required for various interactions with government entities. To register:

• Use the Business Registration Online (BRO) portal.
• Provide your last name, SIN, date of birth, and personal postal code.

Once registered, keep your BN safe and use it to access tax information via the CRA’s My Business Account.

3. Registering for My Business Account

My Business Account is a secure online portal for managing various business accounts with the CRA. To register:

• Create a CRA user ID and password.
• Enroll in multi-factor authentication.
• Register your business number.

The new Document Verification Services (DVS) allows immediate access by validating your identity in real-time.

4. First-Time Filing for Small Businesses

The CRA offers several resources for new small business filers:

• A tax tip guide for first-time business filers.
• A Checklist for Small Businesses with useful links and forms.
• The Liaison Officer service, a free, confidential resource for understanding tax obligations.

5. Digital Services for Small- and Medium-Sized Businesses

The CRA provides various digital services to streamline tax management:

• Filing returns and notices of objection.
• Making payments and online requests.
• Registering businesses and accounts.
• Calculating payroll deductions.

Use My Business Account for business-related taxes, Represent a Client for tax preparers, and My Account for Individuals if reporting business income on a personal return.

6. Authorizing a Representative

To authorize representatives to manage your tax information:

• Confirm authorized representatives via My Business Account.
• Remove outdated representatives using My Account or My Business Account.

Detailed instructions are available on the CRA’s authorization page.

7. Tax Credits for Small and Medium-Sized Businesses

The CRA offers several tax credits, including:

• Scientific Research and Experimental Development (SR&ED) Tax Incentives: Available for eligible research and development activities, providing deductions or investment tax credits.
• Canadian Film or Video Production Tax Credit (CPTC): Helps cover labor costs for certified film or video productions.

For additional tax credits, visit the Federal tax credits page on Canada.ca.

For further questions, the CRA recommends visiting their improved web pages at Canada.ca for easier access to information.

 

Top Business Tax Changes in 2024

Businesses:  Here are the top changes this year that will affect business taxes in 2024

The Canada Revenue Agency (CRA) has announced several important tax changes for businesses effective in 2024. Here’s a summary of the key updates:

Canada Pension Plan (CPP)

• Changes: Updates to maximum pensionable earnings and the second additional CPP (CPP2) contribution rates.
• New T4 Boxes: Introduced for both CPP and Quebec Pension Plan (QPP) contributions starting in 2024.

For detailed information, visit the CPP contribution rates and the second additional CPP contributions pages.

Mandatory Electronic Filing Thresholds

• Legislation Update: From January 1, 2024, businesses must file electronically for six or more information returns to avoid penalties.
• Affected Returns: Includes T4 payroll, T5 investment income, T3 trust income, and T4A pension returns.

More details are available on how to file information returns.

GST/HST Filing for Registrants

• New Requirement: All GST/HST registrants, except charities and selected financial institutions, must file returns electronically starting in 2024.

For more information, visit the GST/HST filing page.

Canadian Dental Care Plan (CDCP)

• New Reporting Requirements: Issuers of T4 and T4A statements must comply with new reporting obligations beginning with the 2023 tax year.

Details on these requirements can be found on the CDCP information page.

Reporting Requirements for Trusts

• New Rules: Trusts must file an annual T3 Trust income tax return, including Schedule 15 for beneficial ownership, for tax years ending after December 30, 2023.

For further information, refer to the FAQ on trust reporting requirements.

Additional Reporting Updates

• T4A and T5 Slips: Easier and more efficient distribution methods are now available for issuers.
• Province of Employment Policy: New administrative policy for employees with full-time remote work agreements, effective January 1, 2024.

More details on these updates are available on the CRA website.

Electronic Filing of Special Elections and Returns

• Digitization: Special Elections and Returns (SERs) forms can now be filed electronically.
• Note: Use the most recent versions of forms to avoid processing delays.

First-Time Business Filers and Small Business Support

• Liaison Officer Service: Free, confidential service for small businesses and self-employed individuals to help understand tax obligations.

For more support, visit the Resources for Small and Medium Businesses web page.

Correcting Errors and Voluntary Disclosures

• Reassessment: Businesses can request a reassessment if there’s an error on their tax return.
• Voluntary Disclosures Program (VDP): Offers relief for taxpayers and registrants who voluntarily correct their tax filings before CRA intervention.

For more details on the VDP, visit the CRA’s Voluntary Disclosures Program page.

Stay updated with these changes to ensure compliance and make the most of available resources and support from the CRA.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.

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