Part 4- Cost of Goods Sold and Gross Profit
- Skip this section, as we do not produce any goods as Uber Drivers. Hence there is no cost of goods sold or affect on our gross revenue.
Part 5- Net income (loss) before adjustments
Okay, finally we get to the good part of this form. This is where we can start inputting our expenses. The total of all those gas receipts, car washes, oil changes, tolls, cell phone bill etc. Remember we can only claim a % of the motor vehicle expenses that are attributable for business. For the purposes of this example we will use the ratio 17,000 (Uber km) / 34000 (total km for year) which is 50%.
Example:
George has summarised total vehicle expenses for the year as $9,000. On
Line 50 of the T2125 form I will enter $4500 since only 50% of these expenses were attributed to business.
Now let us take a moment to go over the other lines in this part since there is a possibility for confusion. All motor vehicle expenses go on line 50. Let us be clear on this point.
Line 32 - Advertising - Does not apply. - Unless you spent money advertising your Uber business.
Line 33- Meals and Entertainment- Does not apply - We did not take our riders out for a steak dinner.
Line 34- Bad Debts - Does not apply- Our earnings are deposited by Uber, we are not direct billing our riders and hoping that they pay eventually.
Line 35- Insurance - Does not apply - This line only applies if you purchased additional insurance for your business such as flood insurance if you own a store front. We already included our insurance under Motor Vehicle Expenses.
Line 36- Interest - Does not apply - We should include any interest payments on our vehicle as part as Motor Vehicle Expenses. This line is for interest paid on other financial obligations such as a business loan or equipment/machinery.
Line 37- Business tax, fees, licenses, dues, memberships, and subscriptions - Applies - Did you pay for MileIQ or do you use Quickbooks to track expenses. Claim these expenses here.
Line 38- Office Expenses - Applicable - Lets say you purchased a laptop to keep a track of your expenses, or you purchased a binder,paper,pens, to log your mileage. This is the line to put that amount.
Line 39- Supplies- Applicable- Did you purchase bottled water, snacks, and charging cables for your riders. Enter these expenses here.
Line 40- Legal, accounting, and other professional fees - Applies depending on when you started Uber. If this is your first tax year doing Uber, does not apply. If you have done Uber for many years, it applies. Claim the cost of Income tax filing (Turbo Tax)
Line 41- Management and administration fees. - APPLIES!!! - Remember that 25% commission and booking fee that Uber deducts. Uber shows it as income. This is our opportunity to deduct that expense. If Uber deducted $5000.00 for example, then enter that amount on this line.
Line 42- Rent- Does not apply- Unless you paid rent for an office or business space. Generally, I would not recommend putting anything in this box.
Line 43- Maintenance and Repairs- Does not apply- We already included this as part of Motor Vehicle Expenses.
Line 44- Salaries, Wages, and benefits - Does not apply - Unless you had employees working for you.
Line 45- Property Taxes- Does not apply- Unless you used a portion of your home to conduct your business.
Line 46- Travel - Applies - Did you pay for tolls while Ubering. Enter the business portion of your tolls here.
Line 47- Telephone and Utilities- Applies- Did you purchase a data plan or a phone exclusively for Uber? Claim the business portion of your monthly phone plan here.
Line 48- Fuel Costs- Does not apply- We have already claimed this as part of Motor Vehicle Expenses.
Line 49- Delivery, Freight, and express- Does not apply- Unless you can attribute this to your business.
Line 50- Motor Vehicle Expenses (not including depreciation) - APPLIES- This is all of our gas, oil changes, interest payments for car, car washes, etc apply. Use Section 17 of T2125 to summarise.
Line 51- Allowance on eligible capital property- Does not Apply
Line 52- Capital Cost Allowance - Applies - Use Part 11 of T2125 form to calculate.
Line 53- Other Expenses- Only use if you can attribute the expense to your business.
Add up lines 32-53. This will tell you your total business expenses.
Subtract your business expenses on Line 54 from your gross revenue and you will have your net income(loss).
Part 6- Net Income (Loss)
This is essentially taking the your Net income(loss) from Part 5 and Re entering it on Line 62 of this section. Unless you had a business partner or remitted GST/HST the other lines in this generally are not applicable to our business.
*Always
consult a qualified tax professional when completing an income tax
return. The content of this post is for informational purposes only and
does not constitute as legal advice.
