Executive Summary: Key Legal and Evidentiary Issues

• An Uber driver appealed HST assessments of $1,251.11 (2015) and $7,319.47 (2016), along with failure-to-file penalties, under the Excise Tax Act

• Classification of the Appellant as an independent contractor rather than an employee of Uber was contested, with limited evidence and no Uber witnesses or documentation presented

• The Minister incorrectly applied the $30,000 small supplier threshold for 2015 by failing to establish when during the year the threshold was exceeded on a quarterly look-back basis

• Input tax credits for meals, telephone, and Highway 407 tolls were denied on substantive grounds — meals were personal, telephone expenses were not adequately separated, and tolls are exempt supplies

• Credit card statements were accepted as valid supporting documentation for purchases under $30 but lacked sufficient prescribed information for purchases of $30 or more

• Procedural fairness concerns arose from the Respondent's post-trial attempt to correct legal errors and the prejudicial effect of conclusory assumptions on a self-represented litigant

Background and facts of the case

Yakup Ayhan Boylu was an Uber driver operating in Ontario throughout 2015 and 2016. He received ride requests through the Uber application installed on his mobile phone, picked up and dropped off riders as directed, and received payments deposited into his bank account after Uber deducted 20% from gross fares. The Appellant testified that Uber had sole control over pricing, fees, and taxes through the Uber App, and that the agreement with Uber was a "take it or leave it" situation with no opportunity to negotiate terms. He understood from his accountant that Uber was deducting HST from fares and paying it directly to the Canada Revenue Agency during the relevant periods.

The Minister assessed the Appellant for HST of $1,251.11 and $7,319.47 for the yearly reporting periods ending December 31, 2015 and December 31, 2016 respectively, along with failure-to-file penalties of $43.70 and $205.05 for those same years. The Minister assumed that the Appellant's sales exceeded the small supplier threshold of $30,000 by no less than $10,875 in 2015 and were at least $63,623.08 in 2016. The CRA had also unilaterally and retroactively registered the Appellant as a GST/HST registrant effective January 1, 2015.

The employee versus independent contractor question

A threshold issue was whether the Appellant was an employee or independent contractor of Uber, as this determined who bore the obligation to collect HST. Applying the four-factor test from Wiebe Door Services Ltd. v. Minister of National Revenue — control, ownership of tools, chance of profit, and risk of loss — the Court found that while Uber's control over the Appellant's activities and ownership of the Uber App should be weighted very heavily, the combined weight of other factors led to the characterization of the Appellant as an independent contractor. Specifically, the Appellant had complete control over the hours when he drove and the amount he drove, had complete control over the car that was just as critical if not even more so to his operations than the Uber App, and could have chosen to offer rides through another ride-sharing service. The Court emphasized this conclusion was based on very limited evidence and carried no precedential value under the Informal Procedure pursuant to section 18.28 of the Tax Court of Canada Act.

Application of the small supplier threshold in 2015

The Court identified a significant legal error in how the Minister applied the $30,000 small supplier threshold for 2015. Under subsection 148(1) of the Excise Tax Act, whether a person is a small supplier in a particular calendar quarter requires a look-back to the four preceding calendar quarters. The Minister appeared to take the position that the moment the $30,000 threshold was exceeded in 2015, the Appellant ceased to be a small supplier, without properly applying this quarterly look-back test. The Respondent's factual assumptions referenced only sales for the periods ending December 31, 2015 and December 31, 2016, based on income tax returns reflecting annual revenue rather than quarterly revenue, and contained no assumption about the distribution of sales during 2015. When the Court raised this potential error, the Respondent attempted to correct it in post-trial submissions by asserting that the Appellant earned sales of $30,000 during the first three calendar quarters of 2015, with no less than $10,875 earned in the last quarter. The Court declined to accept this new position, noting it would deprive the self-represented Appellant of an opportunity to fully respond to the case being made by the Minister, and that procedural fairness is of particular importance in the context of self-represented litigants in the Informal Procedure.

The "taxi business" exception and retroactive registration

The Court also addressed whether the Appellant's activities constituted a "taxi business" under the ETA, which would have required registration and stripped him of the small supplier exemption. The definition of "taxi business" in subsection 123(1) of the ETA was amended effective July 1, 2017 to include a business carried on in Canada by a person of transporting passengers for fares by motor vehicle where the transportation is arranged or coordinated through an electronic platform or system. This amendment did not apply to the reporting periods in issue. Since the Respondent expressed no position, made no arguments, and offered no factual assumptions on this point, the Court did not consider the possibility that the Appellant could have been in the taxi business prior to the 2017 amendment. Similarly, the Court declined to consider whether the Appellant's retroactive GST/HST registration could impose collection obligations during the period when he was a small supplier, as the Reply did not give any notice to the Appellant that retroactive registration might be in issue and the Respondent was not arguing that the Appellant should be subject to HST collection obligations for periods when he is found to be a small supplier.

Input tax credits denied on substantive and documentary grounds

The Appellant claimed input tax credits for tax paid on meals, telephone costs, and Highway 407 tolls. Meal expenses were described by the Appellant as being amounts paid for his own meals rather than for riders, making them personal expenses rather than expenses incurred in the course of a commercial activity. Telephone expenses were partly personal, and the Appellant was unable to separately identify personal telephone expenses and those related to his activities as an Uber driver, having claimed all the tax on all of the telephone expenses for ITC purposes. Highway 407 tolls are exempt supplies under Part VIII of Schedule V of the ETA, meaning no GST/HST is exigible. On the documentation front, the Appellant's original receipts had faded, and he submitted credit card statements instead. The Court found these statements acceptable as supporting documentation for purchases under $30, following the approach in CFI Funding Trust v. The Queen, 2022 TCC 60 and Fiera Foods Company v. The King, 2023 TCC 140, but insufficient for purchases of $30 or more because they lacked the GST/HST registration number of the supplier and sufficient information to identify the amount of GST/HST and provincial sales tax applicable.

Ruling and outcome

The appeal was allowed, without costs, and referred back to the Minister of National Revenue for reconsideration and reassessment. The Court found in favour of the Appellant, Yakup Ayhan Boylu, on the basis that he was a small supplier at all times in 2015 and, as a result of the additional month provided in subsection 148(1), was also a small supplier during January of 2016, and therefore was not required to collect HST or register during the reporting period ending December 31, 2015 or in respect of January of 2016; any penalties were to be revised accordingly. However, the Appellant was required to collect HST on the rides provided by him as an Uber driver from February 1, 2016 to December 31, 2016, and was not entitled to any further relief. No exact monetary amount was awarded to the Appellant, as the relief consisted of vacating the 2015 HST assessment and adjusting associated penalties, with the precise recalculated figures to be determined upon reassessment by the Minister.