Lyft Driver Taxes in Canada 2025

Lyft Driver Tax Basics in Canada

Lyft operates in select Canadian cities including Toronto, Ottawa, and Calgary. As a Lyft driver, you are an independent contractor — not an employee. This means Lyft does not withhold income tax, CPP, or EI. You receive your full fare amount minus Lyft's service fee, and you handle all tax obligations yourself.

Lyft provides an annual earnings summary in the driver app, but this is a starting point, not a complete tax record. Keep your own logs of mileage, expenses, and income throughout the year.

HST/GST: What Lyft Drivers Need to Know

Upon registering for HST, you collect it on every fare. In Ontario the HST rate is 13%. You remit the net HST to CRA (fares collected minus Input Tax Credits). Lyft may handle HST collection on your behalf in some jurisdictions — check your Lyft driver agreement and consult a tax professional to understand your specific obligations.

Vehicle Deductions for Lyft Drivers

Vehicle costs are typically the largest deduction for rideshare drivers. Two methods:

Method 1: CRA Per-Kilometre Rate (Simplified)

Method 2: Actual Vehicle Costs

Track all vehicle costs for the year: gas, insurance, maintenance, repairs, loan interest, parking, and CCA (depreciation). Multiply total by your business-use percentage (Lyft km ÷ total km driven). This method often yields a larger deduction for drivers with higher vehicle costs.

You must keep a mileage log either way. Log every trip: date, start/end odometer, destination, and business purpose.

Other Deductible Expenses

• Cell phone — business-use percentage of monthly bill
• GPS and navigation apps
• Car washes and interior cleaning
• Phone mount and accessories
• Dash camera (capital cost allowance)
• Snacks and water for passengers
• Bank account fees (business account)
• Accounting and tax preparation fees
• Commercial auto insurance premium (if applicable)

Filing T2125 as a Lyft Driver

Report all Lyft income on Form T2125 — Statement of Business Activities. Enter your gross fares as revenue, list all deductible expenses, and report net income. This flows to line 13500 of your T1 return. File by April 30 (payment deadline) or June 15 (return deadline for self-employed) — but note that any taxes owing are still due April 30 to avoid interest.

CPP Contributions

As a self-employed Lyft driver, you pay both the employee and employer CPP contributions — 11.9% combined on net self-employment income up to ~$71,300 in 2025. Half of your CPP contribution (the "employer" portion) is deductible on line 22200 of your T1, providing some relief.

Quarterly Tax Installments

If your net tax owing exceeds $3,000 ($1,800 in Quebec), CRA expects quarterly installment payments: March 15, June 15, September 15, December 15. Missing installments incurs interest. A safe approach: set aside 30% of every Lyft payment into a separate tax savings account as you earn it.

Expense Tracking Tips

• Use a dedicated debit card (like KOHO) for all Lyft-related expenses
• Download and save your Lyft annual summary each February
• Cross-reference app-reported income with actual bank deposits
• Keep fuel receipts even if using the per-km method (useful for HST ITCs)
• Track odometer readings at start and end of every month