There’s no denying that the flexibility and freedom of being an Uber driver, makes it an attractive way to earn an income. Whether it’s your side hustle or full time gig, being a ride share driver comes with a number of tax obligations. So, before you set off, make sure you understand how to plan for tax time.
1. Report your earnings
If you’ve started working as an Uber driver and you haven’t been recording your income, you better check back before June 30. While it’s tempting to view the income you make with Uber as just a hobby, that’s not how the Australian Taxation Office (ATO) sees it.
As an Uber driver, you’re deemed a self-employed contractor engaging in ‘ride sourcing’, and you’re required by law to report any income you make in your yearly return and pay tax on any combined earnings over $18,200. To do this, you’ll need an Australian business number (ABN) and an accurate record of your Uber earnings and expenses.
2. Register for GST
As a general rule, if you earn less than $75,000 you’re not required to register for Goods and Services Tax (GST). However, as an Uber driver, you’re an exception to the rule. Because Uber drivers engage in ride sourcing, they’re subject to the same GST rules as taxi drivers. This means you must register and collect GST – a 10% tax – from your passengers regardless of your annual turnover, and report and pay it to the ATO via a Business Activity Statement (BAS). The same rules apply for Uber Eats delivery services.
3. Claim tax deductions
Claim tax deductions on all the expenses you’re entitled to and you could claw back some of your hard-earned profits come tax time. As an Uber driver, you can claim for a range of vehicle costs including:
- Servicing, maintenance, and repairs
- Interest or lease payments
You can also claim for expenses related to setting up and running your Uber service, such as:
- Driver registration fees
- On-the-job parking expenses
- Refreshments for passengers
- Uber-related mobile phone costs
- In-car entertainment subscriptions, such as Spotify or iTunes
Plus, you can claim a tax credit for the GST you pay on any goods or services you need for your business.
4. Accurately track your mileage
A common scenario for Uber drivers is to use their car for both work and private use. If this applies to you, then you’ll need to be careful about how much you claim for vehicle expenses. The rules state that you can only claim for the part that was used for work, which means you’ll need to calculate the work-related portion.
The logbook method – where you track kilometres travelled for work versus total kilometres – is the preferred method for apportioning vehicle expenses. If this sounds too tedious, you can also use the cents-per-kilometre method, which is a flat-rate deduction for each business kilometre travelled, up to a maximum 5,000km.
Both methods require you to keep a record of distances travelled, which you can do manually or via an automatic GPS mileage tracker, offered on apps such as QuickBooks Self-Employed. Using your car to earn a little extra cash is a smart way to boost your income. While the arrangement does require extra planning come tax time, knowing your obligations and taking advantage of the tools available will make it worth your while.