# My mileage credit amounts more than the tax I've collected. Confused.



## imsam (Apr 10, 2017)

So I'll make my example simple. I drive in Toronto and we've started collecting tax in July 2017. I also have a spreadsheet where I record all the trip distance (excluding the pickup distance, the dead mileage while looking for ride requests).

For my province, the credit is 55 cents per km for up to the first 5000 km and 49 cents after that.

Let's say I've collected $950 in tax but I've driven 4800 km of trip distance. Now my mileage credit is $2640 after multiplying with the 55 cents per km rate.

Am I getting money back or I do not have to pay taxes as long as my tax collect amount is below the mileage credit amount?

How would it work for you guys in the States if you're in a situation like mine? Your collected tax is less than your mileage credit?


Thanks.


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## UberTaxPro (Oct 3, 2014)

imsam said:


> So I'll make my example simple. I drive in Toronto and we've started collecting tax in July 2017. I also have a spreadsheet where I record all the trip distance (excluding the pickup distance, the dead mileage while looking for ride requests).
> 
> For my province, the credit is 55 cents per km for up to the first 5000 km and 49 cents after that.
> 
> ...


In the States it's called a NOL (net operating loss). It can be used to offset income from other sources (like a real job) or carried forward to future years with some limitations just added in the new tax law here.


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## uberxcalgary (Jul 25, 2017)

imsam said:


> So I'll make my example simple. I drive in Toronto and we've started collecting tax in July 2017. I also have a spreadsheet where I record all the trip distance (excluding the pickup distance, the dead mileage while looking for ride requests).
> 
> For my province, the credit is 55 cents per km for up to the first 5000 km and 49 cents after that.
> 
> ...


The TAX you're collecting is the GST/HST.

That's entirely separate from the income tax you have to pay.

There may be a different problem if you drove earlier in the year before Uber started charging GST/HST. You will probably be liable to pay all the GST/HST that customers should have paid/Uber should have collected. The GST/HST would be calculated on the gross Uber fares for that time period.

As an example: (rough numbers here) if your fares totalled -

$10,000 this year. Say $5,000 before July when they started charging GST/HST and $5,000 after.

Then Uber would have charged the 13% on the second half. Then they would have paid that extra $650 to you.

But because you accepted their earlier terms and agreement. Technically you agreed to take on the tax burden. (Canada has passed a law that excludes ride shares from being GST/HST exempt with the under $30,000 rule.)

So because you have $5,000 in fares before they charged GST/HST to the rider, you have to cover the $650 in GST/HST on fares before July when the rules changed.

So even though you collected $650 in HST you will have to remit $1,300 to the CRA for HST. (Your amounts will be based on your actual situation)

You then have to pay your income tax off the rest of your Uber income. This is where using the 55 cent per km to reduce net income comes into play.

There is a crazy amount of regulation and small things you can do to minimize your income taxes. Definitely worth going to an accountant or tax professional that specializes in Taxi/Rideshare tax returns.

Most of the advice you will see here will be from American drivers. Vastly different tax rules.


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## imsam (Apr 10, 2017)

uberxcalgary said:


> The TAX you're collecting is the GST/HST.
> 
> That's entirely separate from the income tax you have to pay.
> 
> ...


Are you a tax professional? Not trying to be rude but to me what you're telling me is completely out of order. I don't think you get it right about how it works.

First of all, yes I understand that the HST I've collected driving uber is a whole separate thing from the income tax I have to pay. What I was talking about in my original post is, the amount of deduction I can claim towards my business expenses. So that I don't have to remit 100% of the HST, even if I did, I'll be able to claim back some portion of it.

Also, I've attended a HST related webinar regarding how uber drivers will deal with the tax and that fact that you said I'll have to pay HST on the rides before July 1st is completely wrong. Also it doesn't make any logical sense. If the rider did not pay HST taxes for the rides, why do the drivers have to bare with paying it out of their own pocket? That's insanely illogical. Do you have a source link for this? I'm very skeptical about this case being true.

The thing you said about where I'd use the 55 cents per km to deduct my income tax amount seems reasonable. Have you done it this way in the past with any other businesses you have? Is it better to do it by this way (total business km * 55 cents) or by ratio between personal and business usage by end of year?


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## uberxcalgary (Jul 25, 2017)

I am not a tax professional but have done a lot of research on it.

Originally, before Uber started collecting GST/HST, it was understood (and Uber even told drivers) that if they earned over $30,000 revenue then the government would require the GST/HST on total rideshare fares to be remitted, in that case, out of pocket. They have since removed the $30,000 limit for rideshare. But since we are now paid the GST/HST we remit that amount no matter our revenue. But like I said, we may be on the hook for the GST/HST not collected by Uber. (this may have changed very recently, I know it doesn’t sound right, but it’s how it was originally stated. I also hope we are not on the hook for the GST we did not collect, and why I’m going to a rideshare savvy tax professional myself so I’m not under or over paying.)

The only way to reduce the amount of GST/HST you have to remit, is through ITC’s (input tax credit) the amount of GST/HST that you have paid on your expenses. So if you had $1000 in business expenses and paid $130 in HST on that, then there is a way to deduct that (or part of that) from the GST remittance.

But there is no way to use the mileage to lower the GST/HST. The GST/HST is not an expense, or an income, it’s a pass through fee. The total amount we collect, goes straight to the CRA.

Then we work on lowering our income taxes on our income through mileage and/or expenses as the situation permits.

It would be 55 cents per business km. Again I would go to a tax pro, as you should be able to claim Kms used driving to pickup passengers as well. That is using the vehicle for the business purposes, it takes fuel and wear and tear to get there as well.

Also. I know it sounds insane that that would ever have been the case about remitting the HST out of pocket. 

But it was all part of the way Uber said we were independent contractors. And they were trying to get away from paying taxes themselves by not registering themselves properly. 

In fact. They originally told the drivers it was our responsibility to collect HST on fares ourselves. Essentially saying we would have to ask for the HST portion from customers ourselves. Which was basically their way of saying “just deal with it”. 
Since Uber was always cashless, and we were actually not allowed to request money from passengers. It was a contradiction they gave just to free themselves from the taxes.


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## imsam (Apr 10, 2017)

uberxcalgary said:


> I am not a tax professional but have done a lot of research on it.
> 
> Originally, before Uber started collecting GST/HST, it was understood (and Uber even told drivers) that if they earned over $30,000 revenue then the government would require the GST/HST on total rideshare fares to be remitted, in that case, out of pocket. They have since removed the $30,000 limit for rideshare. But since we are now paid the GST/HST we remit that amount no matter our revenue. But like I said, we may be on the hook for the GST/HST not collected by Uber. (this may have changed very recently, I know it doesn't sound right, but it's how it was originally stated. I also hope we are not on the hook for the GST we did not collect, and why I'm going to a rideshare savvy tax professional myself so I'm not under or over paying.)
> 
> ...


Yeah, what you said about deducting the mileage from income tax I understood that part. It makes complete sense.

The part that we might be forced to pay HST on the trips uber didn't collect HST from riders, do you remember where you read it? I don't think uber posted it in their agreements or in the in-app news board. I should've seen it if they did.

For claiming the km we spent picking up the customers part, from my understanding it's like this. Since most of my riders are usually 0.5-1.5 km from me (most, some are 4+ km), I'm planning to just keep track of the amount of trips I give each month and roughly estimate each trip includes about 1.0 km of pickup distance to make things easier.

This way, if I've given 500 trips previous month that's $275 mileage credit (assuming 500 trips * 1 km = 500 km and 500 km * $0.55 = $275). It's not a small amount to deduct from the income tax just alone from the pickups.


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## uberxcalgary (Jul 25, 2017)

http://barretttaxlaw.com/uber-gsthst-issue/

This was written by a tax law office. And it's before the GST/HST charge came into effect.

It used to be written on the Uber site. But since the new law came into place they have removed it. This year will be a weird year because it was half under the old laws and half under the new.

So It's hard to say how it will actually be enforced. I'm assuming there will be a lot of audits on rideshare Drivers this year because of these changes and lack of clear direction from the CRA.


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## imsam (Apr 10, 2017)

uberxcalgary said:


> http://barretttaxlaw.com/uber-gsthst-issue/
> 
> This was written by a tax law office. And it's before the GST/HST charge came into effect.
> 
> ...


Yeah, this article is pretty much on point with the tax situation regarding uber drivers at the time.

It's as simple as this. There used to be two groups of drivers

Group 1
Revenues over $30k, register HST number and remit tax

Group 2
Revenues under $30, no need HST number (prior to July 1st, 2017)

But now, all must have HST number and Group 2 will start remitting HST like Group 1 were doing.

Those of Group 1 before July 1st that didn't remit HST even though making above $30k, those are just already breaking the tax policy.


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## uberxcalgary (Jul 25, 2017)

The main thing is those that were making above $30k were required to pay out of their own pocket for the HST. 

The question remains though. The rules for 2017 as a whole say that rideshare drivers have to remit HST on their revenue. It doesn’t specifically say they must pay the HST only on rides after July 1st. 

So, do the changes now mean that:

Some drivers (Group 1) will have to pay HST for the full year, out of pocket for the first half of the year because they earned more then $30k year end.

And other drivers (Group 2) will only have to remit HST for the second half of the year because they earned less. 

There really isn’t a clear breakdown of how the rules work retroactively considering they could possibly be affecting the full year. 

Personally I made more then $30,000 on Uber this year. But I didn’t know I was going to make more then $30,000 until it happened. I didn’t pass 30k until after July 1st. So where does that leave me, or anyone else. I’m not exactly sure.


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## imsam (Apr 10, 2017)

uberxcalgary said:


> The main thing is those that were making above $30k were required to pay out of their own pocket for the HST.
> 
> The question remains though. The rules for 2017 as a whole say that rideshare drivers have to remit HST on their revenue. It doesn't specifically say they must pay the HST only on rides after July 1st.
> 
> ...


Base on the webinar I've attended online hosted by a quickbooks specialist, I'm pretty sure she said to remit HST collected after July 1st only if you're Group 2.

So if you're in Group 1, you remit all rides before July 1st out of your own and just remit the HST you've collected for the trips after July 1st. That's what was said. I don't know how it'll play out for you if you try remitting HST only after July 1st. That would depend on if CRA has access to all your Uber statements prior to July 1st. If yes and if they amount to exceed $30k in total gross revenues, the CRA would probably treat you a little different than Group 2.

But I'm really curious how the tax would work on us because for me, that'll really help me see if I'm really making anything at all. Lol.


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## uberxcalgary (Jul 25, 2017)

Yeah. Luckily Im in Alberta so I only have to cover 5%. But either way, Having to pay out of pocket because Uber refused to collect it initially is pretty annoying. Probably going to mean an extra $1,000 I have to give away.

I’ve pretty much determined that after fuel, expenses, taxes, depreciation, I’m making very little for the amount of effort I put in this year. This will have been the only year I do Uber full time. Moving on to other things, but I may do a couple weekend shifts a month. The ones I know I can average a decent hourly rate for a little bit.


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## imsam (Apr 10, 2017)

uberxcalgary said:


> Yeah. Luckily Im in Alberta so I only have to cover 5%. But either way, Having to pay out of pocket because Uber refused to collect it initially is pretty annoying. Probably going to mean an extra $1,000 I have to give away.
> 
> I've pretty much determined that after fuel, expenses, taxes, depreciation, I'm making very little for the amount of effort I put in this year. This will have been the only year I do Uber full time. Moving on to other things, but I may do a couple weekend shifts a month. The ones I know I can average a decent hourly rate for a little bit.


Yeah, I can totally understand it. Kinda sucks as customers expect to pay rideshare lower than taxi in the first place so yeah making a huge profit each trip isn't much of a reality.


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