Uber, DoorDash and Skip Driver Tax Deductions in Canada

Do ride-share and delivery drivers report their earnings on Form T2125?

Yes. A driver who lives in Canada reports all income from ride-sharing or delivery apps as self-employment income, tips included, on Form T2125, whether the app is for rides or for delivery such as Uber Eats or Skip (CRA: ride-sharing; CRA: gig economy). For ride-sharing the CRA names the business code "Taxi service" (485310) for any vehicle other than a limousine. The charges the platform keeps are a claimable expense.

Platforms report certain sellers' information to the CRA every year, rideshare and delivery included (CRA: reporting rules), so compare the platform's year-end summary with the return before filing. See digital platform reporting.

A driver's case is not simple when:

• this is the first season and the return shows a large balance due;
• the car is also used for personal driving, so its costs must be split;
• there is no logbook for the first season, or receipts and odometer readings were not kept;
• the car was bought to drive, which brings capital cost allowance (CCA);
• ride-sharing began without a GST/HST account, though one is required from the first fare;
• earlier seasons were never reported.

Gather before filing: the platform's year-end income and charges summary, odometer readings from the start and end of the fiscal period, receipts for fuel, insurance, repairs, licence and parking, loan or lease statements, and the car's purchase invoice.

This page covers federal rules. A Quebec resident also deals with Revenu Québec, whose rules can differ, and which administers the GST and QST there.

Which car costs can a driver deduct in Canada?

A driver can deduct the business share of the costs of running the car. The car's purchase price is recovered separately through CCA. The CRA's list of motor vehicle expenses and its guidance for the T2125 give this treatment:

The running costs above are entered together on line 9281. The CRA allows them only when they are reasonable and supported by receipts. The caps on interest and lease apply only if the car is a passenger vehicle; see the taxi question in the CCA section. Most fines and penalties cannot be deducted (CRA: Guide T4002, Chapter 3). Loan payments are not a deduction in themselves: the interest is, and the price comes back through CCA. An electric car's electricity cost is also on the CRA's list; see writing off an electric vehicle.

Can I claim both gas and kilometres?

No. When a driver regularly uses the car for both platform work and personal driving, the CRA's method is one claim: the car's total costs, gas included, multiplied by business kilometres divided by total kilometres (CRA: motor vehicle expenses). Kilometres set the share. They are not a second deduction on top of fuel receipts.

The CRA's guide describes no flat per-kilometre claim for a self-employed person. The per-kilometre rates it publishes, $0.73 for the first 5,000 km and $0.67 after, are for an allowance an employer pays an employee who uses their own car (CRA: automobile allowances). A driver paid by a platform is not in that position.

The CRA's method uses both: receipts for the costs and kilometre records for the share.

How do I work out the business share of my car costs?

Divide the kilometres driven to earn income by all kilometres driven in the year, then apply that fraction to the year's running costs. The CRA asks for a record of both figures.

1. Read the odometer at the start and end of the fiscal period. That is usually the calendar year, but a business that started part-way through the year has a shorter first period (CRA: Guide T4002, Chapter 1). The difference is total kilometres.
2. Log each business trip (see the records section below). The sum is business kilometres.
3. Divide business kilometres by total kilometres.
4. Multiply by the year's fuel, ordinary insurance, repairs, licence, and loan interest or lease within the caps. Add parking and supplementary business insurance in full.

A car used only for platform work still needs the log: the CRA allows only the part of the expenses that relates to earning income, so a claim that every kilometre was business has to be shown by records (CRA: motor vehicle expenses).

The CRA describes business kilometres as kilometres driven to earn income. Where the facts are unclear, such as the drive from home to the first pickup or time with the app on and no order, the treatment depends on the facts; a professional can say what the records support.

What other costs can a driver claim besides the car?

A driver can claim any reasonable current expense incurred to earn income, limited to the business part (CRA: business expenses).

• Platform charges. The CRA says a ride-sharing driver may claim the charges the platform keeps, and lists costs of using a platform to sell services for gig work.
• Phone. The CRA lists telephone costs; enter only the business part of a plan used for both work and personal calls.
• Supplies. The CRA lists supplies as a business expense; a delivery bag is the kind of item a driver may ask about. A lasting item may belong in CCA instead; see capital cost allowance.
• Home office. Separate tests decide whether a home work space can be claimed; see business use of home.

For the form line each cost belongs on, see self-employed expense lines.

What records does a driver need, and for how long?

A driver needs receipts for every cost and records that show business and total kilometres. The CRA allows motor vehicle expenses only when they are reasonable and supported by receipts (CRA: motor vehicle records).

• Receipts for fuel, insurance, repairs, licence and parking.
• A log of each business trip: the date, destination, purpose and kilometres.
• The odometer reading at the start and end of the fiscal period.
• The platform's income and charges summary.
• Loan or lease statements and the purchase invoice for the car.

The CRA says to keep records for six years from the end of the last tax year they relate to, and a base-year logbook for that long after the last year it is used. For a return filed late, the period runs from the filing date, so a driver catching up on old seasons keeps those records until six years after filing; an objection or appeal can extend it (Income Tax Act, section 230). Do not send records with the return; keep them in case the CRA asks (CRA: business records). If a seller gave no receipt, the CRA says to enter the cost in an expense journal. For missing receipts after the fact, see business expenses without receipts.

Do I need a logbook, and can a three-month sample do?

The CRA calls an accurate logbook of business travel kept for the entire year the best evidence of use. A three-month sample can stand in only after a full base year, and only while business use stays within 10% of it (CRA: motor vehicle expenses).

A first-season driver has no base year, so the sample method is not available yet. The sample rules and claiming near-total business use are in the CRA vehicle logbook guide. If the CRA has asked for a logbook that was never kept, see rebuilding a logbook for a CRA review.

Can a driver claim capital cost allowance on the car, and what limits apply?

Yes, for a car the driver owns. CCA is the way to claim the car's cost; it is entered on line 9936, apart from running costs, and only for the business share. The CRA's own example works out CCA on the whole car first, then multiplies by business kilometres over total kilometres (CRA: Guide T4002, Chapter 4).

First-year CCA depends on the purchase date and an incentive. The half-year rule normally limits it to half of the net addition. A car acquired after 2024 and available for use before 2034 can instead be reaccelerated investment incentive property, which generally gives one and a half times the class rate on the addition; a car the driver already owned, or one previously claimed by a related person, may not qualify (Income Tax Regulations, sections 1100(2) and 1104(4.01)). A short first fiscal period cuts the maximum in proportion to its days out of 365 (section 1100(3)). A car already owned for personal use is treated as acquired when driving for income starts, at the lower of its value then and its cost plus half of any increase (Income Tax Act, section 13(7)).

One point is open for a ride-share car. The Income Tax Act leaves a motor vehicle "acquired primarily for use as a taxi" outside the passenger-vehicle definition, and the CRA gives taxis their own class. The CRA words its own exclusion as a car bought to be used more than half as a taxi (CRA: type of vehicle). The same definition also leaves out some vans and pick-ups used mainly to carry goods or equipment. The CRA files ride-sharing under the taxi business code, but the Act's wording and the CRA's published guidance do not settle whether a ride-share car counts as a taxi, or an app delivery van as a goods vehicle, for these rules. The wording looks to why the car was acquired, so a car bought for family use and later driven for a platform may be treated differently from one bought to drive. The answer also decides whether the interest and lease caps apply, and the class chosen for the first CCA claim carries into later years, so it is a question to settle with a professional before that claim.

Selling a Class 10 car later can add earlier CCA back to income (recapture). A Class 10.1 car generally has no recapture or terminal loss, but recapture can apply if it was ever designated immediate expensing property; check earlier CCA schedules before a sale (CRA: Guide T4002, Chapter 4; Income Tax Act, section 13(2)). See selling a business asset. First-year amounts and the electric-car class are in capital cost allowance.

Does GST/HST registration change what a driver can claim?

Yes. A registered driver can claim input tax credits (ITCs) for GST/HST paid on business costs, and the income-tax expense is then shown net of the credit.

A driver doing both rides and deliveries counts sales from both, and any other taxable business, toward that test. While the driver stays a small supplier, mandatory registration generally covers the rides only unless the CRA extends it to the deliveries, and costs of the unregistered deliveries earn no ITCs (CRA: ride-sharing). The driver, not the platform, stays responsible for charging, collecting and remitting GST/HST on fares, even where the platform collects the fare.

The CRA says a ride-sharing or taxi driver can claim ITCs on fuel, repairs, maintenance and washes, but not on insurance or interest, which carry no GST/HST. Under the Quick Method (a simplified way to work out GST/HST owing) most ITCs on purchases cannot be claimed (CRA: GST/HST for taxi and ride-sharing drivers). For a car used for both work and personal driving, only the GST/HST on the business portion qualifies (CRA: percentage of use). On the T2125, reduce each expense by the ITC claimed (CRA: expenses section).

In Quebec, Revenu Québec administers the GST and QST, so registration and credits go through it; this page does not cover them. Buying the car has separate credit rules; see the sole-proprietor row in buying a car through your business. A driver who drove without registering should read drivers who never registered and for the delivery threshold see when to register for GST/HST.

Example

These examples are illustrative. All figures are Canadian dollars.

A delivery driver's year

A delivery driver in Ontario drives 30,000 km in the year, 24,000 km of them for deliveries, so business use is 80%. Gas, insurance and repairs total C$7,500. The car claim before CCA is C$7,500 × 80% = C$6,000. Parking for deliveries of C$300 is claimed in full. Treat the C$7,500 as net of any GST/HST credit. The two claims total C$6,300.

Fuel receipts and a flat kilometre amount

A ride-share driver keeps C$2,400 of fuel receipts and wants to add a flat amount per kilometre. A flat per-kilometre amount is not a second claim. Fuel is already inside the pool: with C$1,600 of insurance and repairs, the pool is C$4,000. If 15,000 of 20,000 km were business (75%), the claim is C$3,000.

A car bought in June

A new driver buys a C$32,000 car in June, before sales tax, and uses it 90% for driving. The price is below the Class 10.1 limit, so that limit does not matter here. Whether the car is Class 10 or in a taxi class is the open question above. CCA is worked out on the cost, in the first year at the incentive rate if the car qualifies (otherwise on half of it) and cut in proportion if the business's first fiscal period is shorter than a year, then cut to the 90% business share. Running costs from June are a separate claim, also at 90%. If a Class 10 car is sold later, recapture can apply. The capital cost allowance guide shows the first-year amount.

Different for you?

• A first season ended with a large balance due: read how self-employed income is taxed and instalments, then get individual tax help to see what your records support.
• There is no logbook, or the CRA asked for one: see rebuilding a logbook, and get individual tax help before replying.
• You kept no receipts or kilometre records, or the year's books are not built: see business expenses without receipts and catching up on overdue books, then get bookkeeping help to rebuild the year before the return.
• You never registered for GST/HST, or registered late: see drivers who never registered and get individual tax help to plan the catch-up.
• You are unsure whether your car is a taxi, which CCA class it belongs in, or how to claim the first year: see capital cost allowance, and get individual tax help before the first claim.
• Earlier seasons were never reported: read unreported income and voluntary disclosure and get individual tax help.
• Two people drive the same car, or you also have a job: costs and kilometres must be split without claiming the same cost twice. Get individual tax help before filing.
• A corporation owns the car: see buying a car through your business.
• The car is electric: see writing off an electric vehicle.