The quick method, priced on your fuel bill
Registered drivers can elect the quick method, which swaps credit-tracking for a flat remittance: a service business in Ontario remits 8.8% of its HST-included sales while charging the usual 13%, keeps the spread, and takes a 1% credit on the first $30,000 of those sales each fiscal year. The price of the simplicity is that input tax credits on operating costs disappear; fuel, repairs, washes and the phone plan all carry 13% you no longer recover. Credits on capital purchases survive the election, so the claim tied to the car itself continues either way.
Which side wins is an arithmetic question about your operating costs. A driver in a thirsty SUV with an aging transmission gives up substantial credits and often belongs on the regular method; a hybrid or EV driver with a small fuel line frequently clears more under the quick method for less bookkeeping. Eligibility runs to $400,000 in annual taxable sales including HST, which covers every solo driver we have met, and the election is made on form GST74 with a deadline set by the period you want it to start in. We run both methods on your actual statements before anyone elects anything, because the election is easy to make and tedious to reverse.
Buy or lease: how the car meets the return
A purchased car depreciates through Class 10 at 30%, claimed at your business-use percentage, and while the accelerated investment rules run, the first year is not cut in half. Above the passenger-vehicle cost ceiling, $38,000 before tax for 2025 purchases, the car lands in Class 10.1 and the excess never depreciates for tax at all, which is the polite federal way of saying the apps do not need you in a luxury trim. A lease deducts its payments as they are paid, again at the business-use percentage and within the monthly leasing limit.
| The question | Buying | Leasing |
|---|---|---|
| First years' deduction | CCA at 30%, largest early, shrinking after | Level payments, deducted as paid |
| An expensive car | Claims stop at the cost ceiling | Deduction restricted by the leasing limit |
| App-level kilometres | No penalty; wear surfaces as deductible repairs | Kilometre caps and excess charges, built for commuters |
| The exit | Selling above the remaining tax value triggers recapture | Hand back the keys; no equity was ever built |
For full-time app work the kilometre row usually decides it before tax does. Contracts written around a commuter's annual distance meet a driver who covers that in a season, and the per-kilometre excess charge at the end of the lease is a cost no deduction repairs. The tax difference between the two routes is real but second-order; we quantify both against your actual kilometres and let the bigger number win.
Instalments, and the other tax nobody warned you about
Once net tax owing passes $3,000 in the current year and either of the two previous years, the CRA expects quarterly instalments on March, June, September and December 15, and its reminder notices are based on old data, not your current earnings. Paying late buys interest that is not deductible, and skipping the reminders does not make the obligation go away. We set instalments from whichever calculation option is safest for your pattern, and reset them mid-year when the apps slow down, so you are not prepaying a profit that is not coming.
The larger shock on a first driver return is usually not income tax but CPP: self-employed people pay both the employee and employer halves on net self-employment income, on the same T1. The planning answer is unglamorous and works: a fixed transfer from every weekly payout into a separate account, sized from your real after-expense margin rather than a guessed percentage of gross. We set that number annually, alongside the business-use percentage conventions that should be decided in January, not reconstructed in April.
What a year of planning looks like at driver scale
This is Tax Planning & Advisory work sized to a one-car business: an annual sitting that elects or revokes the quick method on evidence, times the vehicle replacement against the CCA and recapture picture, trues up instalments, and uses RRSP room to flatten a strong year, since platform earnings swing with the market and the weather. It assumes the registration questions are already settled correctly, which is its own subject, covered on our rideshare tax filing page. And it includes the one question drivers ask us most, whether a corporation would save tax; the honest answer, with the narrow exceptions, lives on our incorporation page. Fees are quoted in writing after a free 15-minute discovery call, and most driver plans take one meeting a year to keep current.
