Whether you're driving for Uber, Lyft, SkipTheDishes, DoorDash, or Instacart, you're not just earning extra cash — you're also running a business in the eyes of the Canada Revenue Agency (CRA). That means you have tax obligations, but also opportunities to claim expenses and reduce your tax bill.
Let’s break down what every rideshare and delivery driver in Canada needs to know for 2025.
Understanding the Tax Landscape for Rideshare & Delivery Drivers in Canada
Overview of Canadian Tax Laws Relevant to Gig Workers
When you drive for a living in Canada, the tax rules treat you as a self-employed worker. You are responsible for reporting all income from rideshare and delivery platforms. This differs from traditional employees, whose bosses deduct taxes from them. You’ll need to file your taxes yourself, which gives you opportunities to claim deductions. But it also means you must keep track of your earnings and expenses carefully.
Rideshare and delivery drivers are self-employed contractors, not employees. This means:
- You must report your business income on a T2125 - Statement of Business or Professional Activities.
- You are responsible for paying your own taxes, including CPP contributions.
No tax is deducted automatically from your payouts — you’ll need to budget for taxes on your own.
Why Tax Compliance is Crucial
Failing to report income or claim proper deductions can lead to penalties from the CRA. An audit might follow if the CRA suspects underreporting. On the flip side, understanding the rules helps you keep more of your money. You can claim business expenses that lower your taxable income. Staying compliant isn’t just about avoiding fines—it’s about making sure your work pays off.
What Income Do You Report?
All earnings from rideshare or delivery driving are classified as business income and must be reported on the T2125 – Statement of Business or Professional Activities when you file your personal T1 tax return.
This includes:
- Delivery fees or fares: The full amount received from customers or passengers.
- Tips: All tips, whether received through the platform or directly in cash, must be reported as taxable income.
Example: If you earned $40,000 throughout the year working with UberEATS — including delivery fees, tips, and bonuses — you must report the full $40,000 as business income on your T2125. A common misconception is that tips or cash payments don’t count, but they are taxable and must be included in your income.
What Expenses Can You Deduct?
As a driver, you can deduct expenses that are directly related to your delivery or rideshare work:
Vehicle-related expenses (pro-rated for business use):
- Fuel
- Insurance
- Maintenance & repairs
- Lease payments
- Capital Cost Allowance (CCA): If you own the vehicle, you can claim Capital Cost Allowance (CCA), which allows you to gradually deduct the cost of the vehicle over time. The CCA rate for passenger vehicles is 30%, using the declining balance method.
- Car washes
- Parking & tolls (for deliveries or pickups)
- Interest on the car loan
Other expenses:
- Cell phone (pro-rated for work use)
- Hot bags or delivery gear
- Tolls, dash cams, music subscriptions (if work-related)
Keep a mileage log! You must track:
- Total kilometers driven during the year
- Business kilometers driven
You can then calculate the business-use percentage and apply that to your vehicle expenses.
GST/HST Obligations for Rideshare and Delivery Drivers?
1. Mandatory GST/HST Registration
As a rideshare driver, you're required to register for a GST/HST account as soon as you begin earning income — even if your earnings are under $30,000. This is because rideshare services are classified as taxi services under Canadian tax law, which mandates immediate registration.
In contrast, delivery drivers only need to register for GST/HST once their total revenue exceeds $30,000 in any four consecutive calendar quarters.
2. Collecting GST/HST on Fares
Once registered, rideshare drivers must charge GST/HST on every fare. The applicable tax rate depends on the province where the service is provided (e.g., 13% in Ontario, and 5% in Alberta).
Example: Jenna gives a ride in Ontario with a $30 fare. She must apply 13% HST, so the customer pays a total of $33.90.
3. Claiming Input Tax Credits (ITCs)
Drivers can claim Input Tax Credits (ITCs) to recover the GST/HST paid on business-related expenses such as gas, repairs, insurance, and maintenance. This helps lower the amount of GST/HST you owe to the CRA.
Example: If Jenna spends $3,000 on fuel for her business in Ontario, she pays $390 in HST (13%). She can claim this full amount as an ITC, which reduces her GST/HST remittance by $390.
4. Filing GST/HST Returns
If you're registered for GST/HST, you're required to file returns either annually or quarterly, depending on your business income. Your return must include:
- The total GST/HST collected from fares
- The ITCs you're claiming on eligible business expenses
Taxable Income Calculation Example
Let’s Walk Through a Comprehensive Example:
Gross Income (from fares, delivery fees, and tips): $52,000
Deductible Expenses:
| Category | Amount |
| Platform Fees (25%) | $13,000 |
| Fuel (65% of $6,000) | $3,900 |
| Maintenance (65% of $1,500) | $975 |
| Insurance (65% of $1,200) | $780 |
| CCA (65% of $11,000) | $7,150 |
| Cell Phone | $720 |
| Parking & Tolls | $300 |
Total Deductible Expenses: $26,825
Net Business Income
$52,000 - $26,825 = $25,175
Max would report $25,175 as her net business income on her T1 personal tax return, using the T2125 - Statement of Business or Professional Activities form.
Do I Need to Make Tax Instalments?
Yes — if you owe more than $3,000 in tax in any given year and expect to owe that much again, the CRA may require you to make quarterly installment payments the following year.
What Records Should You Keep?
If you’re serious about maximizing your tax deductions and avoiding CRA penalties, keeping great records is half the battle. Keep everything for at least six years:
- Platform payout summaries
- Receipts for gas, maintenance, insurance, etc.
- Mileage logs
- Cell phone bills
- Bank statements (if relevant)
CRA can request documentation anytime during a review or audit.
Special Tax Considerations
Tax Implications of Multiple Income Sources
Many drivers work multiple jobs or run small businesses. Be aware that combining different income streams can push you into a higher tax bracket. Planning helps you avoid surprises. Consider the impact of your total income on taxes owed and potential deductions.
International Drivers and Cross-Border Tax Rules
If you’re from abroad or drive across provincial borders, tax laws are complicated. You might be subject to different rates or reporting requirements. Make sure to report income earned in each province and understand tax treaties if working across borders.
Upcoming Regulatory Changes and Recommendations
Canada’s tax laws for gig workers are changing fast. The government is considering new rules for reporting earnings and business registration. Stay informed through CRA updates and seek advice from tax professionals. The more you know, the better you can prepare.
Final Tips
- Set aside 20–30% of your income for taxes.
- Use an app (like Everlance, MileIQ, or QuickBooks Self-Employed) to track mileage and expenses.
- Consider hiring a tax professional if you're unsure about GST/HST or expense claims.
Conclusion
Driving for rideshare or delivery services can be a profitable venture if you stay on top of tax rules. Report all your income accurately, keep good records, and claim all eligible expenses. Register for the necessary accounts and meet all filing deadlines. Proper tax planning helps you save money and stay out of trouble. Don’t hesitate to talk with a tax pro for tailored advice. Keep learning about new rules, and your gig work will keep paying off smoothly.
Book a Consultation Today
Let Filing Taxes –Toronto Tax Professional help you prepare better for next the 2026 tax season with ease. Connect with Filing Taxes at 416-479-8532. Schedule an NTR engagement appointment with us and take the first step toward proper management of your finances.
Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.