How to file taxes for Ride Share & Food Delivery in Canada

Filing taxes can be daunting, especially if you're working as a ride-share driver or food delivery courier in Canada. The nature of these jobs comes with unique income and expense considerations that can complicate your tax filing. Fortunately, accountly.ai is here to help simplify the process and ensure you claim all eligible deductions. Here’s a comprehensive guide on how to file your taxes as a ride-share or food delivery worker using accountly.ai.

Understanding Your Income

As a ride-share or food delivery worker, you are considered self-employed by the Canada Revenue Agency (CRA). This means you need to report all income earned from these activities. Here’s what you need to know:

1. Total Earnings: Report your total earnings from ride-sharing and food delivery platforms such as Uber, Lyft, SkipTheDishes, DoorDash, and Uber Eats. These companies typically provide an annual statement summarizing your earnings, which you can use for tax purposes.
2. Tips: Don’t forget to include any tips received. Tips are considered taxable income and must be reported.
3. Fees: Include all money you received, including any service fees, booking fees, and other fees such as airport, city, or split fare fees. These fees are considered part of your gross income before any deductions by the platforms.
4. Other Income: If you receive any bonuses, referral fees, or other forms of income from these platforms, ensure you include them in your total earnings.

Deductible Expenses

One of the benefits of being self-employed is the ability to deduct business expenses, which can significantly reduce your taxable income. Here are some common deductible expenses for ride-share and food delivery workers:

1. Vehicle Expenses: If you use your vehicle for ride-sharing or deliveries, you can claim a portion of the following expenses:
   • Fuel
   • Maintenance and repairs
   • Insurance
   • Vehicle registration fees
   • Depreciation (Capital Cost Allowance)
   • Lease payments (if applicable)
   • Interest on a car loan
2. Keep a detailed log of your business and personal use of the vehicle to accurately calculate the deductible portion.
3. Cell Phone Expenses: You can claim a portion of your cell phone bill, including the cost of the phone, if you use it for work purposes. This includes data charges, phone plans, and any additional accessories.
4. Supplies: Any supplies you purchase specifically for your business, such as delivery bags, vehicle cleaning supplies, or toll charges, can be claimed as expenses.
5. Parking Fees and Tolls: Any parking fees or tolls you incur while working can be deducted.
6. App Fees: Claim any service fees, booking fees, and other fees such as airport, city, or split fare fees charged by the ride-share or food delivery platforms.
7. Advertising and Promotion: If you spend money on advertising or promotional activities to attract more customers, these expenses are deductible.
8. Other Expenses: Keep track of any other expenses directly related to your business, such as bank fees on a business account, business licenses, and accounting software subscriptions.

Filling Out the T2125 Form

When filing your taxes, you will need to complete the T2125 form, which is the Statement of Business or Professional Activities. This form is used to report your income and expenses as a self-employed individual.

1. Separate Forms for Separate Activities: If you engage in both ride-sharing and food delivery, consider filling out two separate T2125 forms, one for each activity. This helps keep your income and expenses organized and ensures you accurately report earnings and deductions specific to each business activity.
2. Reporting Income: On the T2125 form, report your total income, including all earnings from ride-sharing and food delivery platforms, tips, fees (such as service fees, booking fees, and other platform-specific fees), and any other income received.
3. Claiming Expenses: List your business expenses in the appropriate sections of the T2125 form. Ensure you categorize them correctly to maximize your deductions. accountly.ai can assist you in organizing and categorizing these expenses efficiently.

Using accountly.ai to Simplify Tax Filing

accountly.ai is designed to make tax filing easy for sole proprietors, including ride-share and food delivery workers. Here’s how it can help you:

1. Upload Everything Easily: With accountly.ai, you can upload all your income statements and expense receipts. The software will automatically organize and split out reports for you. This feature makes it easy to get the necessary numbers to fill out tax forms on various tax software platforms.
2. Income Tracking: accountly.ai allows you to seamlessly track your income from multiple platforms. Simply connect your accounts, and it will automatically import your earnings.
3. Expense Management: Easily log your expenses by category. accountly.ai can also help you calculate the business-use portion of shared expenses, like vehicle and cell phone costs.
4. Tax Calculations: The software automatically calculates your taxable income and provides an estimate of the taxes you owe, ensuring you set aside the right amount throughout the year.
5. GST/HST Tracking: If you earn more than $30,000 annually, you must register for a GST/HST number and remit taxes. accountly.ai helps you track and manage these payments efficiently.
6. Year-End Reports: Generate detailed year-end reports that summarize your income and expenses, making it easy to complete your tax return or provide information to your accountant.

Recommended Tax Software

accountly.ai makes it easy to gather the necessary numbers to fill out your tax forms on popular tax software platforms such as:

• Wealthsimple: Wealthsimple offers an intuitive and free interface for filing your taxes. accountly.ai provides all the organized reports you need to input your data accurately.
• TurboTax: TurboTax is another popular option that supports self-employed individuals. Use the detailed reports from accountly.ai to fill out your tax forms with ease.
• H&R Block: H&R Block provides both online and in-person tax filing services. accountly.ai ensures you have all the necessary information to make the process smooth.

Tips for Smooth Tax Filing

1. Keep Detailed Records: Maintain thorough records of all your income and expenses. Use the accountly.ai app to store digital copies of receipts and invoices.
2. Separate Business and Personal Finances: Consider having a separate bank account and credit card for your business expenses to simplify tracking and avoid mixing personal and business transactions.
3. Stay Organized: Regularly update your income and expense records to avoid last-minute stress during tax season.
4. Seek Professional Advice: If you're unsure about any aspect of your tax filing, consult with a tax professional. They can provide personalized advice and ensure you comply with all CRA regulations.

Conclusion

Filing taxes as a ride-share or food delivery worker in Canada doesn't have to be complicated. With accountly.ai, you can easily track your income, manage your expenses, and ensure you're claiming all eligible deductions. By staying organized and using the right tools, you can simplify the tax filing process and focus on growing your business. Leveraging popular tax software like Wealthsimple (which offers a free filing option), TurboTax, and H&R Block makes the process even smoother.

Start using accountly.ai today or contact support@accountly.ai for a demo. Make tax time a breeze!