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CRA's position on GST for Uber drivers

TDI

Member
i had to speak to 3 different Representatives at the CRA until I escalated it to GST Rulings Division.

Here's the takeaway:
- you have to report your gross income from Uber as income using form T2125.
- you have to report zero GST as the service was provided to Uber which is a non-resident entity and any service provided to a non-resident entity is not subject to GST.

Please note that I have consistently been posting that Uber drivers do not have to pay GST, but please report your entire gross income and pay income tax accordingly after deductions.

I will not be responding to any further queries on the matter.

Please also note that the first 2 "frontline" CRA agents I called, rather mechanically told me that if you cross $30k you have to collect and pay GST. It's only when I told them that there was no way I can collect GST on behalf of Uber, did they escalate it.
 

Actionjax

Well-Known Member
i had to speak to 3 different Representatives at the CRA until I escalated it to GST rulings. Division

Here's the takeaway:
- you have to report your gross income from Uber as income using form T2125.
- you have to report zero GST as the service was provided to Uber which is a non-resident entity and any service provided to a non-resident entity is not subject to GST.

Please note that I have consistently been posting that Uber drivers do not have to pay GST, but please report your entire gross income and pay income tax accordingly after deductions.

I will not be responding to any further queries on the matter.

Please also note that the first 2 "frontline" CRA agents I called, rather mechanically told me that if you cross $30k you have to collect and pay GST. It's only when I told them that there was no way I can collect GST on behalf of Uber, did they escalate it.
Even though you don't plan to respond all it takes is Uber to show that the money they pay to you is inclusive of GST and you need to pay it. You are an independent contractor who must collect GST and Uber will just say they are collecting it on your behalf as part of the fare.

While I am sure what they are giving you is an accurate statement it's what information you have provided to them that makes the outcome inaccurate for what drivers need to do.

When in doubt talk to an accountant who has tax experience.
 

Token44

Well-Known Member
Don't take this advice it is wrong!

You got the answer to the question you asked.

You just didn't ask the right questions.

You are not providing service to Uber. You are providing it to the riders.
Read your driver agreement.

It's a service you are providing in Canada.

And HST taxable in Ontario.

Where a provider is no longer a small supplier, HST must be remitted.
 

rikstaker

Well-Known Member
Even though you don't plan to respond all it takes is Uber to show that the money they pay to you is inclusive of GST and you need to pay it. You are an independent contractor who must collect GST and Uber will just say they are collecting it on your behalf as part of the fare.

While I am sure what they are giving you is an accurate statement it's what information you have provided to them that makes the outcome inaccurate for what drivers need to do.

When in doubt talk to an accountant who has tax experience.
oohh dear..this again.

There is no fare breakdown so NO Uber cant say it collects HST from riders and gives HST on Driver payout..thats a steaming pile of horseshit and they cant simply say it includes HST.

""Responding in email, Uber’s Susie Heath wrote there is, in fact, tax charged on rides, but it is up to drivers to collect and remit the tax.

“Eighty per cent of fares collected for Uber trips go to local and independent driver partners who must file their HST (harmonized sales tax) obligations,” she stated.

“As a registered Canadian business, Uber Canada pays all applicable taxes, and we regularly communicate to driver partners on how to file their HST as applicable.”

https://www.thestar.com/news/city_hall/2015/07/21/uber-says-drivers-are-expected-to-collect-hst.html

Notice how she carefully worded her statement..didnt say Uber collects HST, coz it doesnt.

Again.. UBER DOESNT COLLECT HST.

Don't take this advice it is wrong!

You got the answer to the question you asked.

You just didn't ask the right questions.

You are not providing service to Uber. You are providing it to the riders.
Read your driver agreement.

It's a service you are providing in Canada.

And HST taxable in Ontario.

Where a provider is no longer a small supplier, HST must be remitted.
Wrong..We are providing service to Uber..Uber is providing service to Riders. There is no transaction between rider and driver.
 

Actionjax

Well-Known Member
oohh dear..this again.

There is no fare breakdown so NO Uber cant say it collects HST from riders and gives HST on Driver payout..thats a steaming pile of horseshit and they cant simply say it includes HST.

""Responding in email, Uber’s Susie Heath wrote there is, in fact, tax charged on rides, but it is up to drivers to collect and remit the tax.

“Eighty per cent of fares collected for Uber trips go to local and independent driver partners who must file their HST (harmonized sales tax) obligations,” she stated.

“As a registered Canadian business, Uber Canada pays all applicable taxes, and we regularly communicate to driver partners on how to file their HST as applicable.”

https://www.thestar.com/news/city_hall/2015/07/21/uber-says-drivers-are-expected-to-collect-hst.html

Notice how she carefully worded her statement..didnt say Uber collects HST, coz it doesnt.

Again.. UBER DOESNT COLLECT HST.



Wrong..We are providing service to Uber..Uber is providing service to Riders. There is no transaction between rider and driver.
So did a bit of digging on what's going on and found a good explanation of what you are saying. And yes based on what they are doing you are right. They are not collecting HST. But as a contractor providing a service you need to colect HST on the fare over the threshold. Uber just does not want that to be added to what's already being paid.

Uber’s global tax avoidance strategy

Uber pays no Corporate Income Tax in Canada nor will it ever pay Corporate Income Tax as long as its present tax structure stays in place. The tax scheme Uber uses to facilitate this tax dodge is called Double Dutch and the Canadian version is virtually identical to the schemes in place in all territories where Uber operates. Nor is it very different from the tax structures put in place by tech firms such as Google, Apple and Facebook.

Here’s how it works.

Let’s say an Uber user in Toronto uses his smartphone to summon an UberX driver. At the end of the ride the details are recorded, and the rider walks away. No cash changes hands; it’s all billed through the rider’s credit card automatically. There’s no tipping and no fumbling with wallets/purses for cash.

Let’s also say, for argument’s sake, it’s a $50 ride. The fare is credited and sent electronically across national borders into the account of a company in Holland called Uber B.V. This company collects the fare and then, through another Dutch subsidiary (Raiser Operations B.V.), sends, in this case, $40 to the Toronto driver’s account. The remaining $10 enters a labyrinth of Dutch offshore entities.

The secret to the tax strategy is twofold. One, there is no recorded income for Uber in Canada. The Canadian driver, hopefully, pays provincial and federal personal income tax and HST on his Uber earnings, but Uber is invisible to the Canada Revenue Agency in this transaction – therefore no Canadian corporate tax.

Second, Uber B.V. is not Uber headquarters (that’s in San Francisco). Nor is Uber B.V. the international arm of Uber, set up to manage its operations. That’s Uber International C.V., another Bermuda-registered Dutch subsidiary. Basically, Uber B.V. keeps a small proportion of the Toronto fare to cover its expenses, and then transfers the remainder to Uber International C.V. through an “intangible property licence agreement.” Crucially, under Dutch law this royalty payment is nottaxable.

This strategy is called Double Dutch because it uses two companies resident in the Netherlands connected by a licence agreement. The approach creates a mechanism for transferring revenue from tax-paying sources anywhere in the world to offshore entities tax-free.

Uber has 10 subsidiaries in the Netherlands, all of which are housed in the same building in Amsterdam. Only one of the companies, Uber B.V., has real employees. The rest are holding companies or shells.

Uber’s Double Dutch royalty income is not taxed in Canada, in Holland or in the United States (the home of Uber and most of its employees) – nor anywhere else for that matter. This income exists in a “grey zone” of international tax avoidance that’s growing by the day.

Tax strategies such as the ones that Uber (and Google, Facebook and Apple) use are enhanced by the very nature of their businesses—the fact that so much of the value of companies like Uber is in their intellectual property. It’s simply a lot easier to move your company’s intellectual property and the profits it generates to a tax-friendly offshore destination like the Netherlands than it is to relocate your manufacturing operations with its plants and heavy machinery.

The bigger problem with Uber – like many global corporations today – is that it avoids paying federal and provincial corporate taxes while displacing traditional businesses (such as taxis) that do. Corporate tax avoidance of this sort is exploding, and it’s burning a big hole in Canadian government treasuries.

For example, the federal government’s revenues have increasingly shifted towards personal income tax (PIT) paid by you and me. For the first time ever, personal income taxes provided more than 50% of Ottawa’s revenues in 2014/15 – and are forecasted to keep rising. That’s up from a 30% share fifty years ago and even lower shares before then.

On the other hand, despite record profits, corporations provide just 13.6% of the federal government’s revenues in corporate income taxes. That’s a third less than the over 20% share they provided during the boom years from 1946 to 1970.
 

mKat

Well-Known Member
So did a bit of digging on what's going on and found a good explanation of what you are saying. And yes based on what they are doing you are right. They are not collecting HST. But as a contractor providing a service you need to colect HST on the fare over the threshold. Uber just does not want that to be added to what's already being paid.

Uber’s global tax avoidance strategy

Uber pays no Corporate Income Tax in Canada nor will it ever pay Corporate Income Tax as long as its present tax structure stays in place. The tax scheme Uber uses to facilitate this tax dodge is called Double Dutch and the Canadian version is virtually identical to the schemes in place in all territories where Uber operates. Nor is it very different from the tax structures put in place by tech firms such as Google, Apple and Facebook.

Here’s how it works.

Let’s say an Uber user in Toronto uses his smartphone to summon an UberX driver. At the end of the ride the details are recorded, and the rider walks away. No cash changes hands; it’s all billed through the rider’s credit card automatically. There’s no tipping and no fumbling with wallets/purses for cash.

Let’s also say, for argument’s sake, it’s a $50 ride. The fare is credited and sent electronically across national borders into the account of a company in Holland called Uber B.V. This company collects the fare and then, through another Dutch subsidiary (Raiser Operations B.V.), sends, in this case, $40 to the Toronto driver’s account. The remaining $10 enters a labyrinth of Dutch offshore entities.

The secret to the tax strategy is twofold. One, there is no recorded income for Uber in Canada. The Canadian driver, hopefully, pays provincial and federal personal income tax and HST on his Uber earnings, but Uber is invisible to the Canada Revenue Agency in this transaction – therefore no Canadian corporate tax.

Second, Uber B.V. is not Uber headquarters (that’s in San Francisco). Nor is Uber B.V. the international arm of Uber, set up to manage its operations. That’s Uber International C.V., another Bermuda-registered Dutch subsidiary. Basically, Uber B.V. keeps a small proportion of the Toronto fare to cover its expenses, and then transfers the remainder to Uber International C.V. through an “intangible property licence agreement.” Crucially, under Dutch law this royalty payment is nottaxable.

This strategy is called Double Dutch because it uses two companies resident in the Netherlands connected by a licence agreement. The approach creates a mechanism for transferring revenue from tax-paying sources anywhere in the world to offshore entities tax-free.

Uber has 10 subsidiaries in the Netherlands, all of which are housed in the same building in Amsterdam. Only one of the companies, Uber B.V., has real employees. The rest are holding companies or shells.

Uber’s Double Dutch royalty income is not taxed in Canada, in Holland or in the United States (the home of Uber and most of its employees) – nor anywhere else for that matter. This income exists in a “grey zone” of international tax avoidance that’s growing by the day.

Tax strategies such as the ones that Uber (and Google, Facebook and Apple) use are enhanced by the very nature of their businesses—the fact that so much of the value of companies like Uber is in their intellectual property. It’s simply a lot easier to move your company’s intellectual property and the profits it generates to a tax-friendly offshore destination like the Netherlands than it is to relocate your manufacturing operations with its plants and heavy machinery.

The bigger problem with Uber – like many global corporations today – is that it avoids paying federal and provincial corporate taxes while displacing traditional businesses (such as taxis) that do. Corporate tax avoidance of this sort is exploding, and it’s burning a big hole in Canadian government treasuries.

For example, the federal government’s revenues have increasingly shifted towards personal income tax (PIT) paid by you and me. For the first time ever, personal income taxes provided more than 50% of Ottawa’s revenues in 2014/15 – and are forecasted to keep rising. That’s up from a 30% share fifty years ago and even lower shares before then.

On the other hand, despite record profits, corporations provide just 13.6% of the federal government’s revenues in corporate income taxes. That’s a third less than the over 20% share they provided during the boom years from 1946 to 1970.
Finally someone who 'gets it'. Thank gawd :smiles:

Only problem I have with that article is the wording of:

"The Canadian driver, hopefully, pays provincial and federal personal income tax and HST on his Uber earnings"

ZERO business people (e.g. brick layers, truck drivers, landscapers, computer programmers, etc.) 'pay' HST on their earnings! Nobody pays HST on earnings except us stupid Uber drivers (and yes, I'm calling myself stupid here since I'm in the same boat). Normal business people 'collect' HST on their sales, then they subtract however much HST they spent buying stuff to run their business, then they send the balance of those bucks to the government. If the business person paid more HST to buy stuff for their business than they collected selling stuff, they get an HST refund!

We will never see an HST refund. We will be lucky to be able to just bring our HST down to $0.

Uber is super sneaky. And that's fine with me. It's good even, if it means it's good for our business (as long as it's legal of course). I respect that sort of business because it's smart. I just wish they weren't sneaky with us, their valued driver partners. But they are. Uber is not only not looking out for our best interest, they're bluddy well exploiting us and our tax system, and all to get a 13% competitive advantage over the competition. It's like learning your girlfriend is a hooker on the side...and to add insult to injury she does the freaky two girls one cup stuff. :frown:

I was in business for many years. When clients asked if I charged HST (and that was a very common question), I politely and professionally told them: I don't charge you HST the government does. I just collect it for them.

I had a separate bank account just to store HST so I had it when the time came to remit it. Uber drivers are going to get the shock of their life when their car is beat up, they have little or no savings and they learn they were supposed to be taking 13% out of their earnings all along. Where's the money going to come from? They've spent it already. Pity.
 
Last edited:

Murf_Dawg65

Member
The part I am not clear on is why isn't Uber taxable in Canada? It has a permanent establishment by virtue of the offices it rents here, the employees it pays here who reside here. Once you have a permanent establishment I don' t see how you get around not charging HST on its service fees to its drivers. I get the loophole on why HSt doesn't need to be charged to the customers- which the government just changed today- it was long over due- to put us on equal footing with taxis- But they should be charging drivers HST on its 30 or 25 % commission fee to the drivers. Drivers would then need to remit the difference minus as HsT paid on car expenses etc.

I understand how they can avoid paying corporate income taxes via royalty payments- its common in the software industry to move the license holder to a low tax jurisdiction and then bill some R+d costs back to Canada to minimize Canadian corporate taxes, but this doesn't negate the issue of a permanent establishment which would still make Uber service fess taxable. Many non resident companies can avoid HSt by not having a Canadian establishment, a ship things over the internet from the US to Canada, but once they set up shop in Canada, you must charge HST.

I am wondering if this question got answered. It wont change with the new tax rules.



So did a bit of digging on what's going on and found a good explanation of what you are saying. And yes based on what they are doing you are right. They are not collecting HST. But as a contractor providing a service you need to colect HST on the fare over the threshold. Uber just does not want that to be added to what's already being paid.

Uber’s global tax avoidance strategy

Uber pays no Corporate Income Tax in Canada nor will it ever pay Corporate Income Tax as long as its present tax structure stays in place. The tax scheme Uber uses to facilitate this tax dodge is called Double Dutch and the Canadian version is virtually identical to the schemes in place in all territories where Uber operates. Nor is it very different from the tax structures put in place by tech firms such as Google, Apple and Facebook.

Here’s how it works.

Let’s say an Uber user in Toronto uses his smartphone to summon an UberX driver. At the end of the ride the details are recorded, and the rider walks away. No cash changes hands; it’s all billed through the rider’s credit card automatically. There’s no tipping and no fumbling with wallets/purses for cash.

Let’s also say, for argument’s sake, it’s a $50 ride. The fare is credited and sent electronically across national borders into the account of a company in Holland called Uber B.V. This company collects the fare and then, through another Dutch subsidiary (Raiser Operations B.V.), sends, in this case, $40 to the Toronto driver’s account. The remaining $10 enters a labyrinth of Dutch offshore entities.

The secret to the tax strategy is twofold. One, there is no recorded income for Uber in Canada. The Canadian driver, hopefully, pays provincial and federal personal income tax and HST on his Uber earnings, but Uber is invisible to the Canada Revenue Agency in this transaction – therefore no Canadian corporate tax.

Second, Uber B.V. is not Uber headquarters (that’s in San Francisco). Nor is Uber B.V. the international arm of Uber, set up to manage its operations. That’s Uber International C.V., another Bermuda-registered Dutch subsidiary. Basically, Uber B.V. keeps a small proportion of the Toronto fare to cover its expenses, and then transfers the remainder to Uber International C.V. through an “intangible property licence agreement.” Crucially, under Dutch law this royalty payment is nottaxable.

This strategy is called Double Dutch because it uses two companies resident in the Netherlands connected by a licence agreement. The approach creates a mechanism for transferring revenue from tax-paying sources anywhere in the world to offshore entities tax-free.

Uber has 10 subsidiaries in the Netherlands, all of which are housed in the same building in Amsterdam. Only one of the companies, Uber B.V., has real employees. The rest are holding companies or shells.

Uber’s Double Dutch royalty income is not taxed in Canada, in Holland or in the United States (the home of Uber and most of its employees) – nor anywhere else for that matter. This income exists in a “grey zone” of international tax avoidance that’s growing by the day.

Tax strategies such as the ones that Uber (and Google, Facebook and Apple) use are enhanced by the very nature of their businesses—the fact that so much of the value of companies like Uber is in their intellectual property. It’s simply a lot easier to move your company’s intellectual property and the profits it generates to a tax-friendly offshore destination like the Netherlands than it is to relocate your manufacturing operations with its plants and heavy machinery.

The bigger problem with Uber – like many global corporations today – is that it avoids paying federal and provincial corporate taxes while displacing traditional businesses (such as taxis) that do. Corporate tax avoidance of this sort is exploding, and it’s burning a big hole in Canadian government treasuries.

For example, the federal government’s revenues have increasingly shifted towards personal income tax (PIT) paid by you and me. For the first time ever, personal income taxes provided more than 50% of Ottawa’s revenues in 2014/15 – and are forecasted to keep rising. That’s up from a 30% share fifty years ago and even lower shares before then.

On the other hand, despite record profits, corporations provide just 13.6% of the federal government’s revenues in corporate income taxes. That’s a third less than the over 20% share they provided during the boom years from 1946 to 1970.
 
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