Tax Guide for Self-Employed Canadian Taxi & PHV Drivers 2025
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Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact CRA. Read our editorial scope →
Provincial licensing & certification
| Jurisdiction | Requirement |
|---|---|
| Federal | No federal taxi licence. GST/HST registration mandatory for all taxi/PHV operators regardless of revenue (ETA s. 240(1)). |
| Ontario | Municipal taxi licence (e.g., City of Toronto, Ottawa). PHV operators need municipal PHV operator licence + driver licence. |
| British Columbia | Municipal taxi licence or Passenger Transportation Licence (PTB) for regional operators. |
| Alberta | Municipal taxi licence (Calgary, Edmonton). No provincial PHV-specific framework — municipal rules apply. |
| Québec | Taxi driver permit from municipal taxi bureau (e.g., STM for Montreal). Bill 96 French requirements for signage/apps. |
| All provinces | Commercial auto insurance mandatory. Personal policy void if used for taxi/PHV work undisclosed. |
Trade-specific deductible expenses
- Municipal taxi licence / medallion — if indefinite life (most Canadian municipalities), CCA Class 14.1 (5% DB, straight-line). If term-limited (e.g., annual renewal), treat as current expense. Legal fees to acquire licence: deductible
- Vehicle CCA — taxi vehicles follow standard Class 10 (30% DB) or Class 10.1 if cost > $36,000. Heavy use accelerates depreciation; keep detailed records
- Accessible vehicle modifications — wheelchair lifts, ramps, restraints: may qualify for additional CCA or be fully deductible as adaptive equipment; consult provincial accessible transit programs for grants
- Shift / lease operators — if you lease a taxi from a fleet owner: the shift fee/lease payment is fully deductible. Revenue = all fares collected. You still claim fuel, maintenance, and tip income
- Tips — ALL tips are taxable income. Cash tips must be self-reported. Record daily tip estimates; CRA uses industry benchmarks if records are inadequate
- Dispatch equipment & mobile payment terminals — Class 8 (20% DB) if > $500; Class 12 if ≤ $500. Monthly terminal rental fees: current expense
- Vehicle expenses — fuel, maintenance, repairs, insurance (commercial), cleaning: all deductible. Logbook required if also using vehicle personally
- Radio / app dispatch fees — monthly fleet dispatch or app platform fees: current expense
- CPD / first aid training — required by some municipalities: deductible
Mandatory GST/HST Registration — No $30,000 Exemption
Vehicle expenses
Taxi/PHV vehicles are typically driven 40,000–80,000 km/year for business. Keep a logbook if you also use the vehicle personally. Commercial insurance is mandatory — a personal policy will not cover taxi use and will be voided if undisclosed. Some insurers offer specific taxi/PHV policies that include passenger liability; premiums are fully deductible.
GST/HST
Mandatory registration from day one. All taxi and PHV fares are taxable. Most provinces charge GST/HST on the full fare. If you operate through a dispatch service or app, they may collect and remit on your behalf — confirm this in your agreement. You still need your own GST/HST number. Input Tax Credits can be claimed on fuel, vehicle repairs, insurance, and licence fees. File returns monthly, quarterly, or annually depending on revenue level assigned by CRA.
WSIB / WCB coverage
Taxi/PHV work is not typically construction-classified, but some provinces classify it under commercial transport. In Ontario, WSIB coverage is not mandatory for taxi drivers but is available optionally. In BC and Québec, check with WorkSafeBC/CNESST for specific classification. Fleet owners may carry coverage that extends to drivers — verify before purchasing duplicate coverage.
CRA audit focus for this trade
What gets flagged
- Unreported tips — CRA uses credit-card tip data and industry benchmarks; cash tips that appear too low trigger audits
- GST/HST not collected or remitted (mandatory registration often missed by new drivers)
- Personal vehicle expenses claimed without logbook
- Shift fees deducted but fare revenue underreported (fleet data sharing with CRA)
- Commercial insurance not held (personal policy voiding risk)
- Licence CCA claimed as Class 8 instead of Class 14.1
- Accessible vehicle modifications claimed without supporting receipts
Worked example
Toronto taxi driver (shift operator) — $72,000 gross
Gross fares (including tips est. $8k) $72,000 Shift fees (lease from fleet owner) ($24,000) Fuel ($9,500) Vehicle maintenance & repairs ($3,200) Commercial insurance ($4,800) Vehicle CCA (Class 10) ($3,600) Dispatch / radio fees ($1,200) Payment terminal rental ($480) Cleaning & supplies ($600) Municipal licence (current expense) ($850) ──────── Net self-employment income ≈ $23,770 CPP (self-employed) ≈ $5,660 Federal + Ontario tax ≈ $2,100 ──────── Take-home ≈ $16,010 HST collected on $72k @ 13% $9,360 (mandatory)
Related calculators & references
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