Sharing economy
The sharing economy refers to individuals and businesses who use or share their assets to earn income through third-party digital platforms. It includes ridesharing and accommodation sharing, among other activities. This page provides tax information for individuals earning self-employment income or rental income through the sharing economy.
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Ridesharing
Ridesharing is an arrangement in which a driver uses a private vehicle to offer passenger transportation services for a fee, arranged through an online platform. Commonly used platforms include Lyft and Uber.
Income tax obligations for ridesharing
Regardless of how much time you spend driving your vehicle for fares, you must:
- Report all income, including tips, that you earn from driving your vehicle for ridesharing purposes on your income tax and benefit return. You may claim expenses for any charges that the digital platform keeps
- Complete Form T2125, Statement of Business or Professional Activities, or T2 Schedule 125, and file it with your return
- if you drive a limousine, use industry code “Limousine service” (485320)
- for all other automobiles, use industry code “Taxi service” (485310)
- Line 26000 – Taxable income
- Form T2125 Statement of Business or Professional Activities
- How to fill in Form T2125
- T2SCH125 Income Statement Information
GST/HST and ridesharing
The goods and services tax / harmonized sales tax (GST/HST) applies to all ridesharing fares. You must register for, collect and remit (send) the GST/HST to the Canada Revenue Agency (CRA) if you earn any revenue from ridesharing services regardless of the amount earned. The $30,000 small supplier threshold does not apply for ridesharing services.
If you are a vehicle owner or driver who takes part in ridesharing, you might use a digital platform to collect your fares. It is still your responsibility to make sure that either:
- you collect the GST/HST on all fares and remit (send) it to the CRA, or
- the GST/HST is collected and remitted (sent) to the CRA on your behalf
If you also have income from other taxable sales
If your combined taxable sales from ridesharing services and other taxable activities is more than $30,000, you must collect and remit (send) the GST/HST to the CRA on all of your sales (not only on the ridesharing income).
Example
Abby is an Uber ridesharing driver, operating in Ontario, who earns $10,000 from driving passengers. Abby must collect and remit GST/HST of $1,300 and may claim any eligible ITCs. Abby also earns $10,000 for food deliveries through Uber Eats.
Because Abby’s total sales of Uber ridesharing and Uber Eats are under $30,000, GST/HST is only charged on the ridesharing services but not the food delivery activities. However, if Abby’s combined total sales from both activities is more than $30,000, Abby must collect and remit (send) the GST/HST on the combined amount including ridesharing and food delivery activities.
- Calculate the GST/HST you have to collect and send to the CRA:
GST/HST calculator (and rates) - GST/HST and commercial ridesharing services
GST/HST information for taxi operators and commercial ridesharing drivers (for GST/HST purposes, a “taxi business” includes the transportation of passengers for a fare, arranged or coordinated through an electronic platform or system)
Deducting expenses for ridesharing
The GST/HST that you pay on your expenses may qualify for an input tax credit (ITC).
Input tax credits - Ca-ciconline.com
Accommodation sharing
Accommodation sharing is renting part or all of a property, typically for a short period. It can include your primary or secondary residence. It also includes any rentals facilitated by a third party website or application. Common accommodation sharing platforms include AirBnB, CanadaStays, FlipKey and VRBO.
Income tax on accommodation sharing
All income you receive from an accommodation sharing arrangement is subject to income tax.
However, the CRA may consider this income to be either rental income from a property or self-employment business income. The type of income affects how you report it on your tax return.
To determine which type your income is, consider the number and types of services you provide for your tenants.
In most cases, the CRA will consider your income to be rental income from property if you rent space and provide only basic services such as:
- heat
- utilities
- parking
- laundry facilities
However, your income may be considered to be self-employment business income if you provide other services to tenants, for example:
- meals
- security
- cleaning
The more services you offer, the greater the chance that income from your rental operation is considered business income.
What income is considered rental or business
Reporting rental income
If your accommodation sharing income is considered rental income from property, you have to report it on your income tax and benefit return and also file Form T776, Statement of Real Estate Rentals.
- Form T776, Statement of Real Estate Rentals
- How to fill in Form T776, Statement of Real Estate Rentals
Reporting business income for rentals
If your accommodation sharing income is considered self-employment business income, you must report it on your income tax and benefit return and also file Form T2125, Statement of Business or Professional Activities:
Example
Charles rents out his property on AirBnB. The price he charges includes the cost of meals, cleaning, reservation services for tour packages and similar activities, in addition to accommodation. This generally is considered a business endeavour, so Charles is required to report the earnings as self-employment business income on lines 13499 and 13500 of his income tax and benefit return. He must also complete Form T2125, Statement of Business or Professional Activities, and file it with his return.
Renée also rents out a property on AirBnB, but her property price covers only the accommodation services, including heat, hydro, parking and other occupancy services of that nature. In this situation, Renée is generally considered to be earning rental income from a property and must report it as rental income on her income tax and benefit return. She must also complete Form T776, Statement of Real Estate Rentals, and file it with her return.
Deducting rental expenses
Generally, you can deduct any reasonable expenses you incur to earn rental income. However, when you rent only part of a building, such as a room in your house, you can claim only the expenses that relate to the rented part of the building.
To calculate this amount, use a reasonable basis. For example, divide the area of the available rental space by the total area of your home. This will be the percentage of the total area that was rented. Multiply that amount by the percentage of days in a year that the space was rented, then by the total amount of the expense you are claiming.
Example: Calculating the deductible amount of a heating bill
Hunza uses AirBnB to rent out a 240 square-foot room in her home for 209 days. The entire home is 1200 square feet, and its total annual heating costs are $1200. Hunza needs to calculate what percentage of the house’s total square footage is being rented out. She then applies that percentage to the $1200 heating costs and prorates this amount for the part of the year the room was rented.
- Percentage of house rented:
240 ÷ 1200 = 20% - Portion of total heating bill that Hunza can deduct from her rental revenue:
$1,200 × 20% × (209 ÷ 365) = Deduction of $137.42
We recommend that you keep detailed records of all rental income you earn and any expenses you incur to earn that income, because the CRA may ask to see them.
For more information, go to Expenses you can deduct.
GST/HST obligations for accommodation sharing
Short-term accommodation is a rental with a period of continuous occupancy of less than one month. The goods and services tax / harmonized sales tax (GST/HST) applies to short-term accommodation. Rentals of residential premises for periods of continuous occupancy of one month or more are exempt from the GST/HST.
Generally, if you earn more than $30,000 in gross revenue over four calendar quarters from accommodation sharing, you must register for, collect and remit (send) the GST/HST to the CRA.
If you have taxable sales from both accommodation and ridesharing services, and the total is less than $30,000, you have to collect and remit GST/HST only on the ridesharing services. However, you may choose to also collect and remit GST/HST on the accommodation sharing services. If the total taxable sales are more than $30,000, you have to collect and remit (send) the GST/HST to the CRA on both services.
You may choose to register for and collect the GST/HST even if you earn less than $30,000. This lets you take advantage of the related input tax credits (ITCs). These credits are prorated in the same way as expenses that are deducted for income tax. For information, see “Find out if you are eligible to claims ITCs” on Input Tax Credits.
Register for a GST/HST account
Changing property from personal to business use
When you change the use of a property or part of a property (for example, from using it personally to renting it out or vice versa), there may be tax implications. For more information, see Changes in use of property.
Quebec residents
Revenu Québec administers the GST and Quebec sales tax (QST) in the province of Quebec. For more information about GST and QST registration, go to Registering for the GST and QST.
If you participate in accommodation sharing and live in Quebec, consult the Revenu Québec brochure, Individuals and Rental Income for information on the tax treatment of income and expenses related to rental income. If your establishment is in Quebec, you may also have to register for the tax on lodging. For information, go to Registering for the Tax on Lodging.
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