GST/HST for delivery drivers vs rideshare drivers

Two different rules for two kinds of driving

The CRA draws a line between commercial ride-sharing (driving people) and delivery (taking goods, including food, to customers). It matters because only one of them has a small-supplier exception.

Ride-sharing: register from the first fare

The CRA's ride-sharing page states that the C$30,000 gross-revenue threshold does not apply to commercial ride-sharing, and that drivers are treated as taxi operators regardless of how much time they spend driving. That rule has applied since July 1, 2017. Practically, it means that if you drive for Uber, Lyft or another passenger-transport app, you register for a GST/HST account and charge GST/HST on fares from your very first ride, even if you drive one evening a week.

Your effective date of registration is the day you start supplying taxable passenger transportation services. The CRA's registration page also notes that your platform may collect fares for you, but it is still your responsibility to make sure that GST/HST is charged and collected on all fares, or to confirm that the platform does it for you. Ask the platform what it does and keep a copy of your driver agreement. You should also keep the platform's tax summaries to reconcile with your GST/HST return.

Example: a driver who earned C$9,000 in fares in their first year of ride-sharing. Engine result: must register. Commercial ride-sharing: the $30,000 small-supplier limit does not apply, so you register from the first fare.

Delivery: the C$30,000 small-supplier rule

Delivery-only drivers follow the general small-business rule. You become a GST/HST registrant when your total taxable revenue goes over C$30,000 across four consecutive calendar quarters (a calendar quarter is January to March, April to June, July to September, or October to December). Until then you are a "small supplier" and do not have to charge GST/HST. The CRA also allows you to register earlier if you choose to.

Two examples run through the engine:

• Taxable delivery revenue of C$26,000 over four consecutive quarters: small supplier. At or under $30,000 across four consecutive calendar quarters, so you are a small supplier. Voluntary registration is allowed.
• Taxable delivery revenue of C$36,000: must register. Taxable revenue is over the $30,000 small-supplier limit across four consecutive calendar quarters.

Notice that the test is about revenue, not profit. A driver with C$36,000 gross and C$15,000 of expenses has net income of C$21,000, but still crosses the threshold on revenue. This is the most common surprise for full-time delivery drivers: a busy year easily passes C$30,000 of gross even when take-home pay is modest.

The CRA's registration pages explain exactly when your registration takes effect once you cross the limit, and what happens if you have other taxable sales as well, so read them as soon as your revenue gets close. If you do both delivery and ride-sharing, the CRA says that under C$30,000 your mandatory registration generally covers just the ride-sharing, and above C$30,000 you collect on all of your sales. Check the CRA's guidance on your own mix.

Should a small delivery driver register voluntarily?

Registering voluntarily lets you claim input tax credits (ITCs): the GST/HST you paid on business expenses such as fuel, repairs, a phone plan, and a vehicle. The cost is that you must also charge GST/HST on your fares and file returns. Registering means returns and remittances, so be sure you can handle the paperwork. The CRA notes that you might need to remain registered for a minimum period before cancelling, so do not register on a whim.

How the money works once you are registered

Registrants charge GST on taxable supplies (5% federally; in British Columbia there is no HST, so the GST rate is 5%), then subtract the GST they paid on business costs. The difference goes to the CRA. This is a pass-through tax: it is not your income, and it is not an expense. But it leaves your bank account, so you must plan for it.

Illustration (simplified, amounts before GST, no other items). A registered driver bills C$40,000 in fares. Business costs of C$10,000 before GST include the vehicle, used 75% for business (C$30,000 business km ÷ 40,000 km). Another C$1,200 of costs are all-business.

• GST collected on fares: C$2,000.00
• ITCs on vehicle costs (business share): C$375.00
• ITCs on other costs: C$60.00
• Net GST to remit: C$1,565.00

Treat this as an illustration of the mechanism. Your platform may already collect and remit part of the tax, and the CRA decides how ITCs apply to mixed-use vehicles. Ask a tax professional before relying on this for a filing.

How GST/HST interacts with your income tax

• GST you collect is not income, and GST you pay is not an expense, when you account for it correctly. The two are tracked separately and the net is remitted.
• If you are not registered, the GST you pay on a vehicle or fuel is just part of the cost and is deductible with the cost, subject to the business-use share.
• Registered drivers claim ITCs instead. Expenses on the T2125 are then the cost before the recovered tax.

What to do this week

1. Add up your revenue for the last four calendar quarters from every app. Delivery and other taxable revenue combine.
2. If you drive passengers, check that you are registered. If you have been driving without registering, read the CRA's guidance on late registration and consider a voluntary disclosure; this is a good moment for professional advice.
3. If you deliver, set a calendar reminder at each quarter-end to re-check your revenue against C$30,000.
4. Keep every receipt for fuel, repairs, parking and your phone. You need them for ITCs and for your income tax return.

Frequently asked questions

Is food delivery covered by the ride-sharing rule?

The CRA's tax tip on ride-sharing and delivery treats delivery of goods to end consumers, and names food delivery apps among its examples, as delivery, which follows the general small-supplier rule. The ride-sharing rule applies to passenger transportation.

Does the C$30,000 include tips?

The test applies to your taxable revenue. The CRA's guidance is the authority on what counts; if tips are a large share of your income, check how they apply to your situation with the CRA or a professional.

Is GST/HST the same as income tax?

No. Income tax is on your profit and is calculated in our calculator. GST/HST is a tax on sales that you collect and remit, and it has separate filing dates.

What is the GST rate in British Columbia?

5%. BC does not use the harmonized HST, so only the federal GST applies for CRA purposes.

Sources

• CRA, Ride sharing: the C$30,000 threshold does not apply; drivers treated as taxi operators since July 1, 2017
• CRA, Tax obligations for commercial ridesharing and delivery services
• CRA, Gig economy: C$30,000 over four calendar quarters; voluntary registration for input tax credits
• CRA, Register for a GST/HST account: registration is mandatory for taxi operators and commercial ride-sharing drivers, even small suppliers
• CRA, Motor vehicle expenses (GST rate of 5% or your province's HST rate)