Uber Technologies Inc. says it has resolved an “ administrative issue” with the Canada Revenue Agency that involved the ride-hailing company’s Canadian subsidiary arguing it did not need to account for sales tax on rides provided by drivers.
According to a document filed with the Tax Court of Canada, Uber Canada Inc. and the federal government consented to a judgment, “on a without costs basis,” that would allow an appeal by the company regarding the last quarter of 2012 and the first half of 2013. Tax and penalties that the firm was reassessed for would also be eliminated.
Uber Canada had filed a notice of appeal with the Tax Court of Canada last December regarding reassessments it said the Canada Revenue Agency issued in December 2014.
The money involved was relatively small, with $617,772.89 in net tax changes and penalties in dispute, plus interest. More significant was the core issue on which the dispute hinged.
“The CRA’s assumption underlying the Reassessments is that UCI (Uber Canada) was responsible to account for GST/HST on the supplies of transportation services to riders,” the notice of appeal said. “However, UCI did not supply transportation services to riders during the Reporting Periods, or at any other time. At all time (sic), only the driver-partners supplied the transportation services to the riders, not UCI.”
Uber Canada had said it was instead providing “marketing and support services” during the relevant periods, and claimed it properly charged, collected and remitted sales taxes.
The June 12 “consent to judgment” document says the matter would be referred back to the Minister of National Revenue for “reconsideration and reassessment on the basis that” the $617,772.89 in net tax and penalties are removed.
Uber Canada is “entitled to no further relief,” adds the document, which was signed by counsel for the company and by a representative for the Attorney General of Canada.
The Tax Court’s rules state that when parties consent in writing to a judgment disposing of an appeal, the court can grant the judgment without a hearing, or call for a hearing and written representations. There had been no additional filings by the parties as of Tuesday, according to the court’s website, which shows the appeal’s status as “Settlement Received.”
Uber says it has come to terms with the CRA.
“This was an administrative issue and we are pleased to have come to a resolution with the CRA,” an Uber spokesperson said.
Much has changed for Uber since 2013, such as the introduction of its popular UberX service in Canada. Prior to that, Uber had run a cab-hailing service in certain Canadian cities that partnered with municipally licensed taxi and limo drivers.
The federal government then 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.”
Under those changes, a “self-employed 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 tasked with charging, collecting, reporting and remitting the sales tax on rides.
A spokesperson for the CRA said the confidentiality provisions of the Excise Tax Act prevent them from commenting on specific cases.
“The Canada Revenue Agency is committed to administering the tax system in a fair and impartial manner, and ensuring that all Canadians pay their fair share of taxes,” the agency said in an email. “The courts provide Canadians with a further independent review of disputed issues, and court decisions serve to clarify the law or resolve disputes between the CRA and taxpayers.”
Uber has gone public since its tax-court case was launched, but it still faces a bit of legal work over its relationship with drivers.
The Supreme Court of Canada has agreed to hear the company’s challenge of an Ontario Court of Appeal decision in January, which said a clause in the company’s driver-services agreement stating disputes would be settled in arbitration in the Netherlands was “unconscionable and therefore invalid.”
A hearing is tentatively scheduled for November.
Copyright Postmedia Network Inc., 2019