If you drive for Uber or any other rideshare platform, you need to know key tax tips and information. The Australian Tax Office (ATO) is cracking down, and if you want to stay fine-free, you need to understand how the process works for independent contractors.
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Tax Tips For Uber Drivers
Reporting Income In Your Tax Return
The income earned from rideshare driving is considered assessable income, which means you need to report it in your income tax returns. If you incur expenses while rideshare driving, they may be tax-deductible. Expenses generally include anything that relates to holding and maintaining or operating assets you use to provide the services you offer.
Claiming Work-Related Tax Deductions
There are tax deductions that rideshare drivers can claim when they file their tax returns. Think of rideshare driving as a small business. Like any business, you have expenses and you are eligible to claim business activities if appropriate.
Deductions you can claim as an Uber driver:
- The cost you incur during the process of becoming an Uber Driver. For example, once the application process has begun, you can only claim application fees, police and medical checks, etc. You cannot claim any costs you may have incurred before the application process began, such as going to an information evening.
- Passenger costs, such as fuel, mints or water you keep stocked in your vehicle for passengers.
- Tolls, parking, vehicle registration, vehicle licensing and a portion of your mobile phone bills.
- A proportion of licensing, commissions or service fees you pay to the platform.
- Further deductions include the purchase of safety equipment, insurance and the cost of repairing, servicing or cleaning your vehicle.
- You can claim a deduction if you pay a tax agent or account to handle your finances and tax returns.
- You can claim a deduction if you maintain a separate bank account for business purposes.
Claiming the correct deductions can help ensure you get a tax refund rather than a tax bill at the end of the financial year.
What isn't on the Uber deductions list?
You cannot claim the cost of your normal driver's licence as a work-related tax deduction. If you receive a parking or speeding fine, this is not deductible. You cannot claim for meals and drinks you purchase in the course of your work, nor can you claim for clothing purchases unless it's safety-related.
Record-Keeping Your Expenses
Record keeping is a vital part of the rideshare driving process. You cannot claim the deductions outlined above if you do not keep your record diligently.
While you can use a standard logbook to track your driving miles, opting for QuickBooks Software for self-employed people provides you with the ability to snap and store receipts, log expenses, and auto-track mileage with ease. With QuickBooks auto-tracking mileage means you can easily capture the work-related miles you drive, which will allow you to claim further vehicle-related expenses. Let QuickBooks do the heavy lifting.
Don't be tempted to keep the additional income you earn from Uber and exclude it from your tax return. Uber income is very much an important part of your tax summary. This is public information, and your registration plate information and name are listed on the app for everyone to see.
If your return is suspicious in any way, the ATO can contact Uber for the details of your income or even look at your bank accounts. Many rideshare apps share information directly to the ATO, so if you don't report accurately you may end up with fines, interest charges, and tax backpay.
Claiming a Deduction For Using Your Car For Business
There are two options when it comes to business use car deductions. You can claim 85 cents per kilometre. But this only allows you to claim for 5,000 km, which is a low number for many rideshare drivers. Or you can opt to use a logbook to calculate mileage deductions.
If you have a clear log of how much of your car is used for your business then you can deduct the cost accurately. Just be sure to start using your logbook at least 12 weeks before the end of the financial year.
Claiming An Immediate Capital Expenses Deduction
From the ATO's perspective, rideshare drivers are self-employed. As such, you can access the same tax concessions that small businesses have available to them, which means temporarily full expensing of capital items. Initially, this was available until 30 June 2022 but is to be extended through 2023.
What this means is that you can immediately deduct the cost of any tools and equipment you use during the course of operating your business. This includes computers, tablets, mobile phones, and more importantly for rideshare drivers – motor vehicles. This is particularly useful if you want to buy a new or second-hand vehicle.
Registering For GST
Unlike other types of drivers, rideshare drivers need to ensure they are registered for GST. While Uber tax deductions are many, you need to know what Uber tax deductions in Australia are available to you to ensure your tax return is accurate. It's important to understand how claiming Uber on taxes works.
As long as you charge GST from the first dollar, claim GST on work-related purchases, manage your tax deductions and accurately report your income, you shouldn't have any issues.
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