An oft-overlooked component of Canada’s Excise Tax Act (“ETA”) involves the special registration rules which apply to taxi businesses – in place well before the advent of ride-sharing services like Uber and Lyft.

CRA has recently updated its administrative policies on these registration rules to reflect changes made to the ETA on this issue back in 2017!  The new changes update CRA’s published position to incorporate commercial ride-sharing services within the definition of taxi business and is indicative of the risk in relying on such positions which could be out of date and offside current law.

Background

Prior to July 1, 2017, “taxi business” was defined under ETA 123(1) of the ETA to mean “a business carried on in Canada of transporting passengers by taxi for fares that are regulated under the laws of Canada or a province”.  These rules were viewed as insufficient to capture ride-sharing services like Uber and Lyft since the applicable definition hinged on the use of a vehicle as a “taxi” (and applicable provincial regulations of taxi fares).

The government saw this as problematic since under the mandatory registration rules in ETA 240(1.1) – which required taxi businesses to register immediately and without the benefit of the normal $30,000 “small supplier” rule – Uber and Lyft drivers were treated differently (and allowed NOT to register if their supplies remained under that threshold – although we are simplifying here).

In response to this policy gap, the 2017 Budget announced amendments that incorporated commercial ride-sharing services into the definition of taxi business – and all became right in the CRA’s world.

The Updated Info Sheet

Six years later CRA has updated GST/HST Info Sheet GI-196 (GST/HST and Commercial Ride-sharing Services) (the “Info Sheet”) to reflect the fact that the legislation has now been updated and to clarify the application of the registration rules to non-resident drivers. 

Among the notable changes is new guidance for non-resident drivers who are not able to access the normal CRA online business registration portal, but are still required to register — which can be done through the Non Resident Business Number and Account Registration Web Form. 

The remainder of the Info Sheet is largely the same as the 2017 version and covers the process for drivers to register for and utilize various simplified GST/HST measures to make their returns, noting that “although these measures are optional, ride-sharing companies may require self-employed commercial ride-sharing drivers who work with them to consent to using these measures.”

Commentary

While overall updates to CRA’s administrative position on commercial ride-sharing services are comparatively minor, they show the slow pace CRA sometimes takes to match their published administrative position with the current status of the law. 

Practitioners in this area know well the risks of relying on CRA administrative policies and both ride-sharing drivers and businesses are encouraged to seek expert legal advice.

Bottom line, all Uber and Lyft drivers need to be GST registered effective day one of the month they first make supplies of a commercial ride-sharing service!

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An oft-overlooked component of Canada’s Excise Tax Act (“ETA”) involves the special registration rules which apply to taxi businesses – in place well before the advent of ride-sharing services like Uber and Lyft.
CRA has recently updated its administrative policies on these registration rules to reflect changes made to the ETA on this issue back in 2017!  The new changes update CRA’s published position to incorporate commercial ride-sharing services within the definition of taxi business and is indicative of the risk in relying on such positions which could be out of date and offside current law.
Background
Prior to July 1, 2017, “taxi business” was defined under ETA 123(1) of the ETA to mean “a business carried on in Canada of transporting passengers by taxi for fares that are regulated under the laws of Canada or a province”.  These rules were viewed as insufficient to capture ride-sharing services like Uber and Lyft since the applicable definition hinged on the use of a vehicle as a “taxi” (and applicable provincial regulations of taxi fares).
The government saw this as problematic since under the mandatory registration rules in ETA 240(1.1) – which required taxi businesses to register immediately and without the benefit of the normal $30,000 “small supplier” rule – Uber and Lyft drivers were treated differently (and allowed NOT to register if their supplies remained under that threshold – although we are simplifying here).
In response to this policy gap, the 2017 Budget announced amendments that incorporated commercial ride-sharing services into the definition of taxi business – and all became right in the CRA’s world.
The Updated Info Sheet
Six years later CRA has updated GST/HST Info Sheet GI-196 (GST/HST and Commercial Ride-sharing Services) (the “Info Sheet”) to reflect the fact that the legislation has now been updated and to clarify the application of the registration rules to non-resident drivers.  
Among the notable changes is new guidance for non-resident drivers who are not able to access the normal CRA online business registration portal, but are still required to register — which can be done through the Non Resident Business Number and Account Registration Web Form.  
The remainder of the Info Sheet is largely the same as the 2017 version and covers the process for drivers to register for and utilize various simplified GST/HST measures to make their returns, noting that “although these measures are optional, ride-sharing companies may require self-employed commercial ride-sharing drivers who work with them to consent to using these measures.”
Commentary
While overall updates to CRA’s administrative position on commercial ride-sharing services are comparatively minor, they show the slow pace CRA sometimes takes to match their published administrative position with the current status of the law.  
Practitioners in this area know well the risks of relying on CRA administrative policies and both ride-sharing drivers and businesses are encouraged to seek expert legal advice.
Bottom line, all Uber and Lyft drivers need to be GST registered effective day one of the month they first make supplies of a commercial ride-sharing service!