We will explain in detail how Uber drivers need to prepare for their tax. This information may be applied to other rideshare services such as Didi and Ola in a broad sense. The information is for general purpose and you must seek a professional advice from a qualified accountant.
To operate as an Uber driver, you must register for ABN as a sole trader and report your GST every quarter using a business activity statement (BAS). By law, a business with annual turnover less than $75,000 does not require a GST registration. However, a business that provides a rideshare services (i.e. Uber, Didi, and Ola, etc.) must registered for GST regardless of its annual turnover and report this on quarterly basis.
How to report income as rideshare service provider?
Firstly, the gross receipts from providing rideshare services is the gross revenue for the business. Business related expenditures are then deducted from the gross revenue to calculate a net profit from the business, which is your assessable income. Every quarter you must report your GST by calculating the difference between GST payable amount from gross receipts and GST receivable amount from business related expenditures. If your GST payable exceeds GST receivable, the difference is the amount that needs to be remitted to ATO for that quarter. Otherwise, if GST receivable is greater than GST payable, the difference will be refunded for that quarter. Your annual tax return will be lodged after 30 June by incorporating your net business income and other income. You can consult with your accountant for more detail.
(*Note, food delivery is considered a different industry as compared to rideshare service industry, therefore does not require a GST registration unless rideshare service is provided in conjunction with food delivery services)
What exactly are business related expenditures?
There is a general list to help you understand what can be claimed as business related expenditures for this industry.
- Motor vehicle expenses:
You can claim motor vehicle expenses incurred in carrying on a Uber business or other rideshare services. There are two methods to claim these expenses which are “Cents per KM” and “Logbook method”. You can only claim up to 5,000 km using the Cents per KM method.
- Cents per KM method: You can claim 68 cents per KM driven to provide rideshare services to your clients. In most cases, your Uber or other rideshare service summary provides with the distance you have travelled to provide the service.
- Logbook method: A logbook method requires the user to record all motor vehicle expenses including petrol, registration, insurance, maintenance, interest expense, and so on. You can only claim the taxable use of the total expense amount (i.e. distance travelled for Uber/other rideshare service divided by total distance travelled within the same period). The logbook must be recorded continuously for minimum 12-month period beginning 1 July of the tax year. You must record the date, total distance travelled on the date, and odometer readings at the start and end of each journey.
- Other business-related expenses:
- Vehicle registration fee, insurance, repair, maintenance, tyre replacement, cleaning fees, etc.
- Toll fees – only when toll fees incurred during the Uber drive
- Mobile phone expenses related to business
- Parking fees incurred whilst providing Uber/other rideshare services up to $200 per year and receipts must be kept
- Other expenses associated with Uber/other rideshare services:
- Uber/other rideshare services registration fee
- Background check fees such as medical and police certificate
- Amenities such as bottled water, mint, lollies, etc. for customers
- Accountant/tax agent fees
- Bank fees (if you have a business account set-up exclusively for Uber/other rideshare services)
- Internet, only if incurred for the purpose of generating Uber/other rideshare service income
There are expenses that are not allowed for tax deduction and must be discussed with your accountant before claiming. Some of non-deductible expense are:
- Penalty and fines, driver’s licence fees, any expense incurred before your Uber/other rideshare services commenced
What needs to be prepared for my tax return?
- ABN – your ABN registration must be valid if you are providing Uber/other rideshare services.
- Year-end income statement – Uber and other rideshare platforms provide their own income statements for drivers. This statement contains all information required to lodge the tax return. Otherwise, you can provide the monthly statements.
- Logbook – you must provide your logbook if applicable.
- Business-related expenses record – you can provide a summary of business-related expenses; however, it can be replaced by a logbook if logbook method was used.
- If you have purchased a new motor vehicle whilst providing Uber/other rideshare services, you can claim the cost for tax deduction. Additionally, you may be entitled to claim GST credit if applicable. You need to provide any receipt and purchase document related for the new motor vehicle.
- If you have financed your purchase of a new motor vehicle, you can claim the interest expenses for tax deduction. You need to provide the loan contract to claim.
We have looked in detail the tax returns and GST reporting requirements for Uber/other rideshare drivers. To ensure you do the right thing, we recommend consulting with our experienced team for more specific advice.
*Note that above information is for general use only and is not intended to substitute for a professional tax advice. You must always
seek a professional advice from an accountant to avoid unlawful acts.
