We don’t do rides, our driv­ers do: Uber

Simcoe Reformer - Times-Reformer - - CLASSIFIEDS - GE­OFF ZO­CHODNE

The Cana­dian arm of Uber Tech­nolo­gies Inc. is fight­ing a tax re­assess­ment that the ride-hail­ing com­pany says in­cor­rectly as­sumed it was re­spon­si­ble for ac­count­ing for sales tax on rides pro­vided us­ing the ser­vice.

In De­cem­ber, Uber Canada Inc. (UCI) filed a no­tice of ap­peal with the Tax Court of Canada over re­assess­ments it says were is­sued by the Canada Rev­enue Agency in De­cem­ber 2014, which cov­ered pe­ri­ods from Oc­to­ber 2012 to the end of June 2013.

The com­pany claims the CRA’s “as­sump­tion” sup­port­ing the re­assess­ments was that Uber Canada was re­spon­si­ble for ac­count­ing for sales tax on rides pro­vided to pas­sen­gers.

Not so, claims Uber, which said it should only be on the hook for its own “tax­able sup­plies.”

“How­ever, UCI did not sup­ply trans­porta­tion ser­vices to rid­ers dur­ing the Re­port­ing Pe­ri­ods, or at any other time,” the no­tice of ap­peal said.

“At all time (sic), only the driver­part­ners sup­plied the trans­porta­tion ser­vices to the rid­ers, not UCI.”

Dur­ing the pe­ri­ods in ques­tion, Uber Canada claims, it was in­stead pro­vid­ing “mar­ket­ing and sup­port ser­vices.“

It says it pro­vided those ser­vices to its non-Cana­dian-based cor­po­rate own­ers, which au­to­mat­i­cally bill rid­ers’ credit cards, col­lect fares on be­half of driver-part­ners, and then re­mit driv­ers the fares, mi­nus fees for us­ing the Uber app.

Uber Canada says it prop­erly charged, col­lected and re­mit­ted the nec­es­sary sales tax. It is now ask­ing the tax court to va­cate the CRA’s re­assess­ments.

An Uber spokesper­son said in an emailthatthe­com­pany“paysit­staxes in all ju­ris­dic­tions as re­quired.”

The amounts in dis­pute in the tax case to­tal $672,997.35 in “net tax changes,” penal­ties and in­ter­est, the no­tice of ap­peal shows, a rel­a­tively small sum given re­ports pri­vate­ly­held Uber could be worth as much as US$120 bil­lion in an ini­tial pub­lic of­fer­ing that may come this year.

Uber’s busi­ness in Canada has grown since 2013 as well, as the com­pany in­tro­duced its pop­u­lar UberX ser­vice to this coun­try in 2014. Prior to that, the Fi­nan­cial Post re­ported at the time, Uber had run a cab-hail­ing ser­vice in cer­tain Cana­dian cities that part­nered with mu­nic­i­pally li­censed taxi and limo driv­ers.

The claims in Uber’s no­tice of ap­peal have not been proven in tax court. The fed­eral gov­ern­ment has yet to file a re­ply.

How­ever, the fed­eral gov­ern­ment said in its 2017 bud­get that it would amend the def­i­ni­tion of a taxi busi­ness un­der the Ex­cise Tax Act, “to level the play­ing field and en­sure that ride-shar­ing busi­nesses are sub­ject to the same GST/HST rules as taxis.”

Ac­cord­ing to the gov­ern­ment, those changes, which came into ef­fect on July 1, 2017, mean that a “self­em­ployed com­mer­cial ride-shar­ing driver” pro­vid­ing tax­able sup­plies of ride-shar­ing ser­vices is re­quired to regis­ter for a sales-tax ac­count re­gard­less of the amount of money they bring in. The driver is also re­spon­si­ble for charg­ing, col­lect­ing, re­port­ing and re­mit­ting the sales tax on rides.

“As an Uber part­ner, you’re an in­de­pen­dent con­trac­tor,” the com­pany says on its web­site. “When you work for your­self, you’re re­spon­si­ble to col­lect, re­mit, and file your sales tax — HST in On­tario, GST in Al­berta — on all your ride-shar­ing trips to the Canada Rev­enue Agency (CRA).“

A spokesper­son for the CRA said in an email that they could not com­ment on the de­tails of the tax case as it is still be­fore the courts and be­cause of the con­fi­den­tial­ity pro­vi­sions of the Ex­cise Tax Act.

“The Gov­ern­ment of Canada is com­mit­ted to en­sur­ing that Canada’s tax sys­tem is fair and sup­ports an in­no­va­tive econ­omy,” they said.

Uber Canada is part of a group of com­pa­nies ul­ti­mately owned by San Fran­cisco, Calif.-based Uber Tech­nolo­gies, the ap­peal noted, with the Cana­dian unit be­gin­ning op­er­a­tions in March 2012.

Jonathan Gar­butt, a lawyer at Moodys Gart­ner Tax Law LLP, said the tax-court no­tice of ap­peal (which is just two pages long, not count­ing the cover) ap­pears to re­volve around the is­sue — which other ju­ris­dic­tions have also had to come to grips with — of how to de­fine Uber.

“What (Uber is) ba­si­cally say­ing is, ‘you’re tax­ing us on the ba­sis of what our com­pany is not,’ ” Gar­butt said.


The Uber app on an iPad. The ride-hail­ing com­pany is fight­ing a tax re­assess­ment that it says in­cor­rectly as­sumed it was re­spon­si­ble for ac­count­ing for sales tax on rides pro­vided us­ing the ser­vice.

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