Peer-to-Peer Tax Return Filing In Canada

A few months ago, a new client walked into our office holding a letter from the CRA. He looked baffled. “I just rent out my basement on Airbnb on weekends,” he said. “How did they know exactly how much I made?”

Welcome to 2026. The days of “under the table” app income are officially over.

For years, the peer-to-peer (P2P) economy, platforms like Airbnb, Turo, Uber, and Rover, felt like a tax gray area to many Canadians. It felt like “extra cash,” not a real business. But thanks to new legislation requiring digital platforms to share data directly with the CRA, the taxman now knows about your side hustle before you even file your return.

If you are participating in the P2P economy, your tax return filing in Canada just got a little more complicated. Here is what you need to know to stay safe this tax season.

The “Gig” Is Up: New Reporting Rules

The biggest change for the 2025 tax season is the full implementation of the Model Rules for Reporting by Platform Operators.

In plain English? The apps and the government are speaking.

Whether you rent out your car on Turo, sell vintage clothes on Poshmark, or drive for Uber, these platforms are now legally required to collect your information (including your SIN or Business Number) and report your earnings to the CRA. If the income reported on your tax return doesn’t match the data the CRA received from the app, you are virtually guaranteed an audit.

Is It a Business or Just a Hobby?

This is the first defence line we hear: “But I only do it occasionally. It’s a hobby.”

The CRA disagrees. If you are engaging in a peer-to-peer transaction with the expectation of profit, you are running a business.

Selling your old couch on Facebook Marketplace for $50 is a personal transaction (no tax). Buying used couches to fix them up and resell them on Facebook Marketplace for a profit? That is a commercial activity.

For most P2P activities, like renting property or providing rides, the CRA views this as business income, not employment income. This means you don’t get a T4 slip. Instead, you are responsible for tracking every dollar yourself.

How to File: The T2125 Form

When it comes time to file, you can’t just throw a number on line 10400 of your tax return and call it a day. Peer-to-peer income must be reported on Form T2125 (Statement of Business or Professional Activities).

This form allows you to report your gross income (what the customer paid) and, crucially, deduct the fees the platform took.

For example, if you rented your car on Turo for $100, and Turo took a $25 cut, you don’t report $75 of income. You report $100 of revenue and $25 of expenses. This distinction matters significantly for GST/HST thresholds.

The GST/HST Trap (Read This Carefully)

This is where most people get into trouble.

The General Rule:

If your total worldwide gross revenues from your business exceed $30,000 in a single year (or over four consecutive quarters), you must register for, collect, and remit GST/HST.

The “Ride-Sharing” Exception:

If you drive for Uber or Lyft, the $30,000 threshold does not apply to you. You are required to register for GST/HST from the very first dollar you earn.

The “Short-Term Rental” Trap:

If you are renting out a property on Airbnb, the rules for claiming GST/HST on the purchase of the home vs. the revenue generated are incredibly complex. We’ve seen people accidentally trigger a massive GST bill on the market value of their condo just by changing how they rent it out. Proceed with caution here.

What Can You Actually Deduct?

The silver lining of being classified as a “business” is that you can deduct expenses. But you have to be reasonable.

If you drive for Uber, you can deduct a portion of your gas, insurance, and maintenance. But you can only deduct the percentage of kilometers driven for business. Driving to the grocery store doesn’t count.

If you rent out a room on Airbnb, you can deduct a portion of your mortgage interest, utilities, and internet. But again, it’s prorated based on the square footage of the rental space and the number of days it was rented.

Warning: The CRA is aggressively auditing “100% write-offs.” If you claim your personal vehicle is used 100% for business, expect a phone call.

Why You Need a Professional

In previous years, you might have guessed at your numbers and flown under the radar. With the new data-sharing rules, that invisibility cloak is gone.

A specialized tax accountant does more than just fill out the forms. We help you:

• Reconstruct records if the app’s data is messy (and it usually is).
• Navigate the GST/HST minefield, especially for short-term rentals.
• Ensure your income matches what the CRA already knows, preventing audits before they happen.

The peer-to-peer economy is a great way to make money, but it’s a terrible place to gamble with your taxes.

If you’re interested in learning more, feel free to schedule a consultation

FAQ: Peer-to-Peer Tax Filing