Guide to CRA Form T2125 for Uber and Rideshare Drivers

Driving for Uber, Lyft, or other rideshare platforms is a popular way for newcomers to Canada to earn income while they settle in and look for employment in their field. However, many new drivers don't realize that rideshare driving means you're running a business — and that comes with specific tax obligations. The most important form you'll need is CRA Form T2125: Statement of Business or Professional Activities.

This guide explains everything you need to know about reporting your rideshare income, claiming deductible expenses, handling GST/HST, and completing Form T2125 accurately.

Are You Self-Employed?

Quick tip: download the official T2125 first, then fill it while following this guide: Download T2125 form (official CRA).

Yes. When you drive for Uber, Lyft, or any other rideshare platform, you are not an employee of that company. You are an independent contractor operating your own business. This means:

• No income tax is deducted from your earnings — you're responsible for reporting and paying it yourself
• No CPP or EI is deducted — you must pay both the employer and employee portions of CPP (called CPP contributions on self-employment income)
• You must collect and remit GST/HST on your fares
• You can deduct legitimate business expenses to reduce your taxable income
• You must file Form T2125 with your annual income tax return

What Is Form T2125?

Form T2125 — Statement of Business or Professional Activities is the CRA form used to report income and expenses from self-employment. You include it with your personal income tax return (T1) when you file each year. The form calculates your net business income (or loss), which is then included in your total income on your tax return.

See also: First-Year Tax Filing Guide

Download the form and its guide from the CRA website.

GST/HST: A Critical Obligation

This is where many rideshare drivers make mistakes. In Canada, rideshare services are considered taxable supplies for GST/HST purposes. Unlike traditional taxi drivers, rideshare drivers must register for GST/HST regardless of their income level — there is no $30,000 small supplier threshold for rideshare drivers (this threshold applies to most other businesses but not to taxi/rideshare services).

In BC, the GST rate is 5% (BC does not have HST — it uses GST + PST). Here's what you need to know:

• Register for GST immediately: You must register for a GST account with the CRA before you start driving. Register at canada.ca/business-registration.
• Collect GST on fares: Uber and Lyft typically collect GST from riders on your behalf and remit it, but you're still responsible for ensuring it's properly accounted for.
• File GST returns: You must file regular GST returns (usually quarterly or annually for small businesses).
• Claim Input Tax Credits (ITCs): You can claim GST paid on your business expenses (gas, car washes, phone plan) as ITCs to reduce the GST you owe.

Completing Form T2125: Step-by-Step

Part 1 — Business Identification

Enter your business information:

• Industry code: Use 485300 (taxi and limousine service)
• Business name: Your name or a business name if you registered one
• Business address: Your home address (if you work from home)
• Fiscal period: January 1 to December 31 (calendar year for most individuals)

Part 2 — Internet Business Activities

Indicate that you use the internet for business (since you use the Uber/Lyft app to receive ride requests and process payments).

Part 3 — Income

Report your total gross rideshare income for the year. This is the total amount you earned before Uber/Lyft takes their commission. You can find this on your annual tax summary from the rideshare platform:

• Uber: Download your annual tax summary from the Uber driver dashboard
• Lyft: Access your earnings summary in the Lyft driver app or website

Include all income from rideshare driving: fares, tips, bonuses, promotions, and any other payments from the platform.

Part 4 — Expenses

This is where you list your deductible business expenses. For rideshare drivers, common deductions include:

Deductible Expenses for Rideshare Drivers

Vehicle Expenses (Most Significant Deduction)

Since you use your personal vehicle for rideshare driving, you can deduct a proportionate share of your vehicle expenses based on the percentage of kilometres driven for business versus personal use. Keep a detailed mileage log!

Deductible vehicle expenses include:

• Fuel (gas): Track every fill-up
• Insurance: Your commercial rideshare insurance premium
• Maintenance and repairs: Oil changes, tire rotations, brake pads, etc.
• Car washes: Keeping your vehicle clean for passengers
• Licence and registration: Annual vehicle registration fees
• Lease payments: If you lease your vehicle (proportionate to business use)
• Capital Cost Allowance (CCA): If you own your vehicle, you can claim depreciation (CCA) instead of deducting the purchase price directly. Your vehicle falls under Class 10 (30% declining balance rate) or Class 10.1 if it cost more than the prescribed limit.
• Interest on car loan: If you financed your vehicle purchase, the interest portion is deductible (up to CRA limits)
• Parking: Parking fees incurred while waiting for rides or picking up passengers

Phone and Data Plan

Your smartphone is essential for rideshare driving. You can deduct the business-use portion of your monthly phone and data plan. If you use your phone 60% for rideshare and 40% for personal use, you can deduct 60% of the cost.

Rideshare Platform Fees

The commission that Uber or Lyft takes from each fare is a deductible business expense. This is typically 20-25% of the fare.

Supplies

Items you buy for passengers — water bottles, phone chargers, mints, air fresheners — are deductible if they're for business use.

Accounting and Tax Preparation

Fees paid to an accountant or for tax software to prepare your business return are deductible.

The Mileage Log: Your Most Important Record

The CRA requires you to keep a mileage log to support your vehicle expense claims. This log should record:

• The date of each trip
• The starting and ending odometer reading
• The destination and purpose (business or personal)
• The total kilometres driven

At the end of the year, calculate your business-use percentage:

Business-use % = Business kilometres ÷ Total kilometres × 100

For example, if you drove 30,000 km total in the year and 18,000 km were for rideshare, your business-use percentage is 60%. You can then deduct 60% of all your vehicle expenses.

Many drivers use apps like MileIQ, Everlance, or Stride to track mileage automatically using their phone's GPS.

CPP Contributions on Self-Employment Income

As a self-employed individual, you must pay both the employer and employee portions of CPP contributions on your net self-employment income. For 2026, the combined rate is approximately 11.9% on net earnings between $3,500 and the yearly maximum. This is calculated on Schedule 8 of your tax return.

You do not pay Employment Insurance (EI) on self-employment income unless you opt in to the EI special benefits program.

See also: Employment Insurance (EI) Benefits Guide

Quarterly Tax Instalments

If you expect to owe more than $3,000 in income tax for the year (or owed more than $3,000 in either of the two previous years), the CRA may require you to make quarterly instalment payments. These are due on March 15, June 15, September 15, and December 15. Failure to make instalments can result in interest charges.

Common Mistakes to Avoid

1. Not registering for GST: This is the #1 mistake. You MUST register for GST before you start driving. There is no exemption threshold for rideshare/taxi services.
2. Not keeping a mileage log: Without a log, the CRA can deny your vehicle expense deductions entirely.
3. Claiming 100% of vehicle expenses: Unless your car is used exclusively for rideshare (no personal use whatsoever), you cannot claim 100%. Be honest about the split.
4. Forgetting to report tips: All tips are taxable income. Even cash tips must be reported.
5. Not setting money aside for taxes: Since no tax is deducted from your earnings, you need to save approximately 25-30% of your net income for taxes. Open a separate savings account for this purpose.
6. Missing the filing deadline: Self-employed individuals must file by June 15, but any tax owing is still due by April 30. Filing late results in penalties and interest.

Resources

• CRA Form T2125
• CRA GST/HST Information
• CRA Guide for Self-Employed Individuals
• Uber Driver Tax Information

Driving for Uber or Lyft can be a great way to earn income as a newcomer to Canada, but it's essential to understand your tax obligations from day one. By registering for GST, keeping meticulous records, tracking your mileage, and filing Form T2125 accurately, you'll stay on the right side of the CRA and maximize your legitimate deductions to keep more of what you earn.