Delivery Service Tax preparation
I work in a food delivery service (i.e., Skip the Dishes, Door dash, etc.).
How can I claim my expenses? What information is needed to file my taxes?
If you work in the food delivery service, and you do not receive a T4, you will be considered self-employed. You must claim your income plus tips that you earned during the tax year.
To calculate what usage proportion of your car or cellphone is related to the delivery service, CRA needs a mileage report. In this report, you will indicate the opening Km at the beginning of the tax year, the closing Km at the end of the tax year, and the total Km driven for the purpose of the business.
The business use percentage =Total Km driven for the business (Delivery)/ total Km driven during the tax year
You need to also keep track of your mileage on each shift. It means writing down the opening and closing Km when you start and finish a shift on the specific days you are working. CRA sometimes asks for the mileage report, so it is suggested to record it consistently. You can find the Mileage report template here!
You also can claim the expenses directly related to your work. Below, is the list of the most common expenses you can claim.
1. Motor Vehicle expenses: When we are preparing your taxes, we need this information listed below. You may also find the template we provided for delivery tax preparation here.
Note that you should provide all the expenses in total over the tax year (Business + Personal).
– Name and Description of Vehicle
– The date you started doing this job if it is not the beginning of the year
– The date you stopped working if it is not the end of the year
– Income Earned
– Kilometer driven for business
– Opening Km (Beginning of the year)
– Closing Km (End of the year)
– Fuel and Oil Expenses
– Interest on Vehicle Loan
– License, Insurance, and Registration
– Maintenance and Repairs Cost
– Leasing (If applicable)
– Date of Lease Commencing
– Date of Lease Ending
– Lease Amount incurred during the business use of Vehicle
Please provide a copy of the bill of sale if you purchased or sold this vehicle during the year.
Please provide a copy of the lease agreement if you entered in the lease during the year, or if this was the first year the vehicle was used in your business
You can also claim your car depreciation each year you are working in delivery service. In that case, we need the date you purchased your vehicle, the purchased price of your car, and the last year’s UCC (Undepreciated Capital Cost) if you claimed depreciation last year.
2. Cellphone expenses: If you have a separate phone for delivery services, you can claim all your phone expenses. However, if you use your cellphone for personal purposes or any other business, you need to know that only the portion used for delivery service is deductible. You may give your tax preparer the full amount, they will calculate the delivery portion of it based on the business use percentage explained above.
Having all this information will help us to fill out T2125 for self-employment and get your taxes done!
If you have any questions regarding the Food delivery tax return, email us at firstname.lastname@example.org!