Is being a Toronto Taxi Driver a Good Tax Move ?
Before you can even determine if being a taxi driver has any tax advantages you have to determine if you are classed as a transportation employee, or are you a self employed individual. Each of these circumstances have some benefits and drawbacks to them regarding your tax situation.
Remaining simply as an employee puts you in a position where all of the necessary pay deductions are being done by your employer, who is most likely the owner of the cab that you are performing your services in. This way you are making your contributions to the Employment Insurance program as well as the Canada Pension, plus the tax you owe concerning your wages is being withheld. This makes it relatively easy for you to file your taxes. Plus it builds your CPP for your retirement years. Then if you happen to become unemployed you at least have some EI contributions that may make you eligible for unemployment insurance. At the same time you don’t have the expenses that are incurred as the taxi vehicle owner.
Time is money when it comes to owning a taxi vehicle and most like if you are the owner of a taxi cab you want and need to keep your vehicle on the road as much as possible. This can place you in the position of being self employed as well as being an employer, as you simply cannot personally operate your cab 24/7. If this is not a position you want to be in then you will have some down time in regards to the vehicle’s operation.
In any event as the taxi owner and operating the vehicle yourself you are still entitled to the business deductions by way of expenses related to the operation of your vehicle. There are set rules as to what are eligible expenses. There are also other government rules that you need to adhere to such as GHT/HST criteria.
It is really important that as at taxi driver you don’t just assume that you are doing your taxes correctly, or that the tax preparer that you have chosen is well versed in the tax implications of this particular industry. It is worth the small price you will have to pay for an experienced accountant to complete your taxes for you and to educate you about your specific situation as a taxi driver, and what your options may be if any exist.