As a Canadian Uber driver, managing your taxes efficiently can help you save 20-30% more at tax time—and that starts with understanding your options for claiming vehicle expenses. The Canada Revenue Agency (CRA) provides two methods for vehicle deductions: the flat rate (simplified) method and the itemized method. With the new rates being listed, make sure you know what you are eligible to claim as an Uber driver to maximize your savings while remaining audit-proof. Here’s a breakdown of what the 2024-2025 flat rate is, how to use it, and key reminders for filing your taxes accurately.
What Is the CRA Flat Rate Method?
For 2024, the CRA’s simplified flat rate allows workers to deduct 70 cents per kilometer for the first 5,000 business kilometers driven, and 64 cents per kilometer beyond that. For those planning ahead for 2025, the rate has increased to 72 cents per kilometer for the first 5,000 km’s, and 66 cents/km after. This rate covers all vehicle-related expenses, including gas, maintenance, insurance, and depreciation. This rate changes each year to reflect the costs of owning and using your vehicle in Canada, and its main purpose is for businesses to reimburse their employees when they use their car for work.
How it is calculated:
Track your total kilometers driven (both personal and work-related).
Calculate the percentage of kilometers used for work (business use).
Multiply business kilometers by the applicable flat rate.
Example: If you drove 15,000 km total, with 10,000 km for work:
First 5,000 km: 5,000 × 0.70 = 3,500
Remaining 5,000 km: 5,000 × 0.64 = 3,200
Total deduction: $6,700
However, it’s important to note that the flat rate is an estimate and not intended for self-employed drivers to file with. While it simplifies record-keeping, it may not always reflect your true expenses. Unlike in the US, Canadian drivers must keep an expense log as well and use the itemized approach when it comes to actually filing.
The Itemized Method: For Filing
The itemized method allows you to deduct actual vehicle expenses (fuel, repairs, insurance, lease payments, depreciation, etc.) based on the percentage of kilometers driven for Uber. This is the method the CRA asks you to use when filing.
Example: Your vehicle expenses for the year were $12,000 and you used your car for work 60% of the time:
$12,000×.60 = $7,200 Deduction
Things to keep in mind:
The CRA requires you to maintain your records for up to 6 years (e.g., receipts, mileage logs).
This method often results in a larger deduction for drivers with newer vehicles, high fuel/maintenance costs, or those whose vehicle underwent a large repair.
Why You Can’t Skip the Itemized Method at Tax Time
While the flat rate is a useful estimate for budgeting, the CRA requires you to use the itemized method when filing your taxes (if you drive for gig-apps in Canada). If audited, you must prove your deductions with receipts and logs, even if you used the flat rate for initial calculations. This is where apps like RideWiz can help as they do the record-keeping for you in the background, so you can focus on driving
Final Takeaways for Uber Drivers
Use the flat rate to estimate deductions quickly, but rely on itemized calculations when filing taxes.
Keep your expense receipts for up to 6 years (either in a box, or upload a picture to the RideWiz app to store them in the cloud)
Don’t stress! It may seem complicated when you’re just getting started, but doing your taxes as an uber driver can be very simple with good record-keeping.
By staying organized and understanding these rules, you’ll keep more money in your pocket and avoid surprises come tax season.