It's not that CRA doesn't cabbies to be contractors, its that they require all taxi drivers to register for and collect GST/HST- taxi industry does not qualify for the sub-$30K exemption. The reason for this was that otherwise, there were fears from full-time drivers that part-time drivers, making under $30K/year, would be favoured by customers over full-time drivers.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/txlmsn/menu-e...

If cabbies are contractors, there is still the question of who handles the rider's money.

I'm a software development contractor myself. But I don't handle the revenue of the company or companies I work for, from their customers. So the GST on that revenue is none of my business at all.

Similarly, a cab company could operate such that cabbies are contractors, but the company collects the fares, and then pays the cabbies out of that under whatever compensation terms are between the cabbies and the company.

In that case, since the company is not a small operator meeting the 30K-and-under rules, it has to collect and remit GST.

Some of the drivers might meet the rule themselves. They bill the company with their invoices and do their own GST accounting. Those that work a lot charge the GST. Some that work only little can get away without it. Either way, that makes no difference to the cab company. When that company is charged GST by a contractor, it can probably subtract that from the GST it collects and remits as a "GST input credit". When it isn't charged GST, it doesn't subtract.

Either way, the company can get the contractors "GST free". This is fair when we consider that a company with permanent employees also gets them "GST free".

The "GST cheating" in Uber is probably that the drivers themselves are not just considered contractors, but entire one-person transportation businesses which collect revenue directly from the riders. Effectively, each Uber driver is an entire one-person cab company operating one cab. Uber is then their supplier: they pay something to Uber for the services of being in the Uber network.

If there are large numbers of part-time Uber drivers that meet the 30K exemption, then that's a big loss of potential GST revenue to CCRA, compared to if those drivers were contractors who get paid by a cab company that itself collects fares with GST (even with the input credits they may get). When a driver meets the exemption, the CCRA gets no GST whatsoever from that piece of the pie: not even the difference between GST on some sales, and input credits with respect to the driver associated with those sales