GST/HST information for taxi operators and commercial ride-sharing drivers

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GST/HST for taxi operators and commercial ride-sharing drivers
Registering for a GST/HST account
Calculating the GST/HST included in a fare
Calculating ITCs
Calculating the net tax

GST/HST for taxi operators and commercial ride-sharing drivers

As a GST/HST registrant, you usually have to collect the GST/HST on amounts you charge for taxable supplies of property and services. However, in the case of a passenger transportation service supplied by a taxi operator or a commercial ride-sharing driver, tax is usually already included in the fares. Learn more: How to calculate the GST/HST included in a fare.

As a GST/HST registrant, you can generally claim input tax credits (ITCs) to recover the GST/HST paid or payable on your business purchases such as gas, car repairs, and car washes. You have to keep records of the amounts you pay or owe to support your ITC claims. Learn more: Input tax credits, and GST/HST Info Sheet GI-196, GST/HST and Commercial Ride-sharing Services.

In addition, you have to fill out and file GST/HST returns according to your reporting period. This will be either annually, quarterly, or monthly.

When you fill out your GST/HST return, you can use either the regular method or the quick method to calculate your net tax. Learn more on how to fill out your GST/HST return: Complete and file a return – When to file.

Registering for a GST/HST account

If you are a self-employed taxi operator or commercial ride-sharing driver who supplies taxable passenger transportation services, you must register for a GST/HST account even if you are a small supplier.

You are usually self-employed if you are in one of the following situations:

• You own your taxicab or motor vehicle.
• You lease a taxicab or motor vehicle from an owner for a flat fee, either on a daily, weekly, or monthly basis.
• You lease a taxicab or motor vehicle from an owner for a percentage of fares.

If you are not sure whether you are self-employed or an employee, you can request a ruling from the CRA to determine your status by filling out Form CPT1, Request for a CPP/EI Ruling – Employee and Self-Employed?.

Calculating the GST/HST included in a fare

The GST/HST is usually included in the fares for a passenger transportation service supplied by a taxi operator or a commercial ride-sharing driver. For that reason, you may have to calculate the amount of GST/HST included in the fares.

To determine the amount of GST included in your fare, multiply the total fare by 5 and divide the result by 105.

To determine the amount of HST included in your fare:

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

Learn more about the provincial GST/HST rates: GST/HST calculator (and rates).

Calculating ITCs

You can claim ITCs for the GST/HST paid or payable on your business purchases, such as:

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

You cannot claim ITCs for insurance costs or interest because they are not subject to the GST/HST.

You cannot claim ITCs on most of your business purchases if you use the quick method to calculate your net tax.

You may be able to use the simplified method for claiming ITCs.  Learn more: Calculate ITCs using the simplified method.

Calculating the net tax

As a taxi operator or a commercial ride-sharing driver, you need to calculate your net tax to file your GST/HST return. There are two ways to calculate your net tax – the regular method and the quick method.

Regular method

If you use the regular method, you total the GST/HST you charged or collected and deduct from this amount the GST/HST you paid on your business purchases and expenses for which you can claim an ITC. The difference between these two amounts, including any adjustments, is your net tax. If you charged or collected more GST/HST than the amount you paid on your purchases. you must the difference to the CRA. If the GST/HST you paid is more than the GST/HST you charged or collected, you can claim a refund of the difference.

To calculate ITCs, most small businesses can use the simplified method. Learn more: Calculate ITCs using the simplified method.

Quick method

The quick method of accounting is another way to calculate the net tax. You can use the quick method of accounting to calculate your GST/HST remittance. The quick method remittance rates are less than the GST/HST rates of tax that you charge. This means that you remit only a part of the tax that you charge or collect. The part that is not remitted under this method is reported as income on your income tax return. You can begin using this method if the total revenue from your annual worldwide sales and those of your associates (including zero-rated supplies) is no more than $400,000 (including the GST/HST) in any four consecutive fiscal quarters over the last five fiscal quarters. You can start or stop using the quick method at the beginning of any reporting period by submitting Form GST74, Election and Revocation of an Election to use the Quick Method of Accounting. If you choose to use the quick method of accounting, you have to continue using it for at least a year. For more information, see Guide RC4058, Quick Method of Accounting for GST/HST.

Learn more on the net tax calculation: Complete and file a return – Calculate the net tax.