Uber has faced numerous stumbling blocks in Canada, and the result of the company’s unregulated stature in the country means drivers are operating illegally. Indeed, Uber operatives are breaking numerous laws when they decide to work for the company, including driving without a Class 4 license and with auto insurance coverage.
There is also another law that is being broken by Uber drivers, and this one has not been discussed as much as others. It seems that drivers picking up passengers and getting paid by Uber think that their earnings are not taxable, essentially allowing them to work tax-free.
The reality is quite the opposite as Uber earnings are taxable. It is an interesting law conundrum that Uber presents almost across the board. Because of its position as an illegal and unregulated company, should drivers still pay tax?
Of course the answer is yes, simply because drivers just use Uber as a service, they are not directly employed by the U.S. technology company and are instead considered to be self-employed. Canadian law dictates that self-employed Uber drivers must report their earnings and include a completed Form T2125 in tax returns.
Of the 22,000+ Uber drivers in Canada’s cities, all are considered independent workers in the eyes of the CRA, and Uber confirmed that tax payments were the responsibility of individuals in a statement made to CBC News:
“As with any company that uses independent contractors, it is the responsibility of the contractor to remit their taxes as required by the CRA,” Uber spokeswoman Susie Heath said in a statement to CBC News.
Those who make over $30,000 per year (unlikely from Uber driving alone) must register with the Canadian Revenue Agency (CRA) to charge GST/HST. It is common for Uber drivers to forget these steps, firstly because of the misconception that driving for the company is tax free, and secondly because many drivers are not used to the responsibilities of being self-employed.