I have a situation. My client has self employed income from Lyft, Uber & Uber Eats. Lyft & Uber statements shows HST collected amounts on Uber ride fares however, Uber Eats statement shows no tax collected on Uber Eats ride fares. My questions are:
Why there is no tax collected on Uber eats ride fare? Does this fall under zero rated category?
What is the best approach to record his income on T2125. Shall I create two T2125 forms. One to report income collected with HST and other one not collected with HST. Or shall i report everything in one form. If I follow the 2nd approach, the HST collected will not be 13% of the Sales amount.
Also in HST return, HST collected will not be 13% of sales. What is the best way to report to avoid CRA audit?
I would record everything on one T2125. There are many reasons why tax collected might not equal 13% of sales so I would not be too concerned about that.
i don’t know if anyone really knows what the situation is with Uber and Uber Eats. I would think they should both have HST but…
Uber Eats is not classified as “Zero Rated”… it is a delivery service.
If the client only worked for Uber Eats, they would not need to register for or collect HST (unless they crossed the 30,000 sales threshold).
If you work for Uber (and Lyft) you are required to be registered for HST regardless of whether or not your annual revenue meets the 30,000 sales threshold. This mandatory HST requirement was implemented in 2017 to level the playing field with taxi & limousine drivers who were required to be registered regardless of their annual revenue.
Since the client works for Lyft and Uber then HST registration is mandatory because they are considered to be commercial ride operators . Once the client is registered for HST they are required to collect and submit 13% of all of their commercial revenue as HST. Since the revenue generated by Uber Eats is also considered to be commercial sales HST would be required to be collected.
Essentially, HST is required to be collected by the driver on the Uber Eats revenue because the driver is already registered for HST. Once you are registered for HST you can’t pick which sales you collect tax on and which sales you don’t.
I don’t know what the UberEats people pay drivers, but if no mention on the statement, it occurs to me that the payment from UberEats to the Registrant driver must be deemed to include GST/HST, so the driver would effectively be getting less than they originally thought.
Hence, I was curious how this was handled in the Contract…
“For Uber eat, you DO NOT have to register nor does Uber collect HST on delivers. There is no HST on deliver services.”
Why not? Also this client driver is not solely a Uber Eats driver.
The client referred to in the Original Post is a GST Registrant.
I have been unable to find an exemption for “Uber Eats” or “delivery services” specified in the Excise Tax Act…- Perhaps you could give a reference to those sections?
Uber Eats drivers are considered couriers or delivery service.
Delivery service is certainly a taxable supply.
If an Uber Eats driver is otherwise registered for HST they are required to collect HST on their delivery revenue (ie Uber Eats). Once again a person or business who is registered for HST can not decide which of their sales they will collect tax on and which they won’t.
Now, if the Uber Eats driver is not otherwise registered for HST then they do not need to collect HST from Uber Eats. In the case that was described, the driver was already registered for HST by virtue of the fact that an Uber-X Driver must register for HST after their first dollar of revenue.
Maybe they’re only delivering food from NYC restaurants to Canadian consumers, so it’s considered zero-rated transportation of tangible personal property from a place outside Canada to a place in Canada? Though the food would probably arrive cold and they might get the fee refunded, so I suppose it’s moot.
Last year, i asked my client for transaction records to make sense of UBER’s HST. Try as I might, I could not get the math to work. UBER uses some kind of voodoo or they are misrepresenting the info and ripping off drivers. Based on their history, I suspect the latter. In any case UBER Eats delivery is a taxable supply.
In the end I used the amount UBER gave. If this comes back at the client- they can at least fight it as they were only able to work off of the info UBER gave them. The driver has no idea what to charge until they get their reports, and that’s from UBER
This particular topic came up with a friend regarding this topic. Now, as an Uber driver HST income is itemized in the statement summary from Uber. I switched over to Uber Eats because of Covid19 risk of picking up potential infected riders. Anyhow, my point is I don’t see any HST income from the deliveries which I have completed. Although if you look further into the PDF tax invoice per ride you’ll see for the “delivery service fee” an HST amount. It says that it’s a tax invoice issued by Uber Portier B.V. on behalf of me. It has my name and my HST number listed. Even the monthly statements don’t include HST income for Uber Eats. It does for Uber. Provides a full breakdown. So, is the HST income imbedded in the delivery fare? And if so, why wouldn’t it be itemized the same as the rider fares? Seems confusing.
It’s funny. I’m going through the same. I drive Uber/ Uber Eats sparingly. Since, Covid19 I’ve transitioned to Eats. However, I’ve noticed after doing my HST return for the 1st quarter that I couldn’t find any HST income from my deliveries in March. I started Eats in March. I even checked my daily fares. Nothing. Whereas, for rides it’s listed and provides a monthly HST amount for each month. However, if I log into the Uber partners website, and look at the statement invoices Uber provides a detailed tax invoice of each delivery where the gross amount includes 13% HST to the delivery service fare. If this is so, why wouldn’t UBER include this in a separate category? I’m a little confused. Unless, it’s Uber that’s taking care of the HST on our behalf for Uber Eats?
HST does not apply on what’s called “interlining” in the trucking industry. When I worked for a towing company, the tow truck operators did not charge or collect HST. It seems to me this came under the interlining definition and I think I can see where it applies to Uber Eats. In trucking, where one transport company picks up a shipment and hands it off to the next trucking company who may hand it off to a local delivery service, the tax is only charged once, not at every step in the process. I would guess this is what’s happening with Uber Eats.
I think that the problem happening here is that the ride share system is a mandatory HST so über is collecting the monies. But the eats system does not have mandatory HST. So über isn’t collecting the HST. What they don’t realize is that, if they have a person who is a driver for the ride sharing system, they also have to charge HST on the delivery portion of the eats system.
I now regret giving Uber Eats my GST/HST registration number. I wasn’t obligated to since I exclusively deliver food (no passengers) and I’m nowhere near an income threshold that would have made it mandatory for me to do so. I thought I could just take advantage of the ITCs (and I don’t mind doing all the bookkeeping).
I’m in Ontario (so HST is 13%). When I look at all my trip invoices that were created prior to giving Uber Eats my GST/HST registration number, I see that Uber Eats is charging me 35% of the delivery fare. (It takes a bit of sleuthing but you can match a given trip invoice to a specific delivery in the application’s “Earnings Activity” section using the invoice’s date and its Gross Amount.)
But for trip invoices after they received my GST/HST registration number, the delivery fare now INCLUDES the HST collected from the restaurant on my behalf and they are charging me 35% of THAT total.
Therefore, in effect, I am being charged 35% of the pre-tax fare PLUS 35% of the 13% HST (4.55%), for a total of 39.55%.
I presume that I have to remit 100% of the HST collected (ITCs notwithstanding) so for every $100 Uber Eats collects from restaurants on my behalf (as an independent contractor) I’m only receiving $65 and I have to remit the full $100 to the government.
Maybe I’m missing something but it appears that contractors who have given Uber Eats their GST/HST registration numbers are being charged 4.55% more per delivery.
Based on the assumptions I made above (GST/HST registrants are charged 39.55% of delivery fares instead of 35%), at tax time how do I account for the additional 4.55%?
A non-GST/HST-registrant Uber Eats driver’s taxes are simple. If he does $1,000.00 in deliveries, he is charged 35% in delivery fees by Uber and receives an invoice from Uber for $350 that he can use as an expense against gross income at tax time. Ignoring all other expenses, his net is $650.00. (I’m ignoring tips for this discussion.)
But a GST/HST-registered Uber Eats driver who does that same $1,000.00 in deliveries receives an additional $130 of HST (at 13% in Ontario) that Uber collected from restaurants on the driver’s behalf. Uber then charges the driver 35% of $1,130.00 in fees and the driver receives an invoice from Uber for $395.50. The driver’s net is now $734.50. If he remits 100% of the $130.00 of GST/HST that was collected from the restaurant (ITCs notwithstanding), he is left with $604.50 net.
The GST/HST-registrant is therefore netting $45.50 LESS than the driver who did not register for GST/HST (4.55% of the $1,000.00).
At tax time, this driver has an invoice for delivery fees charged by Uber for $395.50. How can the driver file his taxes and fulfill his GST/HST remitting obligations without losing $45.50 on every $1,000.00 in income?
Can he legally withhold $45.50 of the $130.00 on his GST/HST claim? (Probably not.) Failing that, can he claim the $45.50 as an expense against his income even though he has no invoice to prove that expense? (Again, probably not.)
So what to do?
I realize that the simple method of GST/HST filing could be used but the process should be fair to those who choose the manual method.
Though the food would probably arrive cold and they might get the fee refunded, so I suppose it’s moot.
