Uber Canada Reaches Settlement with the CRA in Sales-Tax Dispute

written on behalf of Feigenbaum Law

Earlier this year we blogged about a notice of appeal filed by Uber Canada Inc., the Canadian arm of Uber Technologies Inc., in which the company asked the Tax Court of Canada to vacate reassessments made against it by the CRA.

Now, Uber Canada Inc. says that it has resolved their “administrative issue” with the CRA, consenting to a judgment on a without costs basis which would permit the company to file an appeal and for tax and penalties that it was reassessed for to be eliminated.

A Brief Recap

Uber Canada Inc. filed the notice of appeal in December 2014 claiming that it did not need to account for the sales tax (HST in Ontario, GST in Alberta) on rides provided by Uber drivers.

The basis for this argument was Uber’s treatment of its “driver-partners”, who the company claimed were independent contractors, not employees.

Uber argued that it merely provided “marketing and support services” for the driver partners, and that it was the driver partner’s themselves who were providing the rides, not Uber. As such, it was the driver partners who were responsible for collecting, remitting, and filing the sales taxes on all rideshares, and the CRA’s assumption that Uber Canada Inc. was responsible for accounting for the GST/HST on “transportation services” was, in Uber’s mind, incorrect.

The Agreement

The consent to judgment document between the parties is dated June 12 and notes that the matter is being referred back to the Minister of National revenue so that the money at issue (just over $610,000 in tax and penalties) be removed.

The document additionally indicates that Uber Canada Inc. is not entitled to any further relief.

Uber’s Position on the Settlement

An Uber spokesperson framed the issue as an “administrative” one and noted that the company is “pleased to have come to a resolution with the CRA.”

The money at issue was itself not the main concern for the company. Rather, it was the central question of how to classify the driver partners that was more of a focus for Uber. Indeed this is something that is also at the center of other legal disputes the company is currently involved in, here in Canada and in other jurisdictions.

In the 2017 federal budget the government specifically amended the definition of  taxi business to ensure that ride-sharing companies such as Uber were subject to the same GST/HST as taxis in order to “level the playing field”. In the wake of these changes, self-employed commercial ride-sharing drivers must register for a sales-tax account (GST or HST) and must charge, collect, and remit those taxes on rides provided.

The CRA’s Position on the Settlement

A spokesperson for the CRA told the Financial Post that, due to confidentiality provisions, they are unable to comment on any specific cases, further noting:

“The Canada Revenue Agency is committed to administering the tax system in a fair and impartial manner, and ensuring that all Canadians pay their fair share of taxes,” the agency said in an email. “The courts provide Canadians with a further independent review of disputed issues, and court decisions serve to clarify the law or resolve disputes between the CRA and taxpayers.”

How Can Feigenbaum Law Help?

If you have questions about personal tax planning, HST remittances, paying taxes as an independent contractor or self-employed individual, or other related matters, contact Mark Feigenbaum. We assist our clients in making informed choices that lower their overall tax burden, ensure tax compliance, and avoid penalties that can amount to thousands of dollars. We offer our clients the confidence and peace of mind that comes with knowing that they have a highly skilled team working to manage their tax matters.

We offer custom solutions to your complex tax issues. Our extensive familiarity with the US and Canadian tax systems means we create novel solutions to meet your individual needs. We are lauded for our ability to solve problems that other professionals have deemed unsolvable. Our approach is solution-focused and creative. We pride ourselves on our ability to think outside the box and provide our clients with solutions tailored specifically for their needs.

Contact us to learn more about how we can help or call us at (416) 777-8433 or toll free at (877) 275-4792.