Accounting for Law

Tax compliance of Uber drivers natural target for CRA

Although reports have surfaced claiming the Canada Revenue Agency (CRA) is attempting to audit rideshare company Uber, the agency is likely more interested in ensuring that its drivers are tax compliant, says Toronto tax litigation lawyer David J. Rotfleisch

According to a recent report from Buzzfeed, the CRA tried to audit Uber last year, however, the tax agency claimed in a Federal Court filing that the company provided no response or partial responses to most requests to see its files.

“The Minister sought and continues to seek the respondent’s books, records and documents in order to determine whether (Uber) has complied with its duties and obligations under the Income Tax Act and properly computed and reported taxable income,” says the government filing, via Buzzfeed.

But, the article notes that Uber says the CRA’s deadline fell on the same day the government’s court action was filed. Uber says it is co-operating and responded on that date. The CRA dropped its legal action soon after filing it.

While the article says it is not clear whether Uber drivers would be part of an audit, Rotfleisch, founding tax lawyer at Rotfleisch & Samulovitch Professional Corporation, says they are the likely target.

“CRA probably has little interest in auditing Uber Canada. Their target is clearly Uber drivers, to ensure tax compliance. Uber is high profile now, so a natural target for CRA,” he says.

“This is exactly what happened with eBay Canada a few years ago. The CRA asked eBay for access to their records to be able to get a list of power sellers and then to audit the power sellers. eBay fought but CRA won, got the list and audited.” 

As Rotfleisch explains: “Uber drivers are required to report income from Uber, after directly related expenses. Also if they reach billings of $30,000 from any sources in any calendar year they are required to register for HST and to collect and remit HST.” 

If the drivers fail to do both, he says, they are subject to penalties, at a minimum, or even prosecution for tax evasion. 

However, he says, Uber drivers can submit a voluntary disclosure before the CRA approaches them, in which case there would be no prosecution, no penalties and a possible break on interest.

Further coverage on Newstalk 1010’s The Night Side

To Read More David Rotfleisch Posts Click Here
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