Being an Uber driver is a relatively new and unique way of earning money and can be an option for many people with a driver’s license and a good car. Unfortunately a lot of Uber drivers do not realise the income tax and GST implications.
The Australian Taxation Office (ATO) has stated that all Uber drivers must be registered for GST. Unlike other industries, it does not matter how much income you earn through Uber driving; from your first dollar earned you must register. Once registered for GST, you will need to start lodging quarterly Business Activity Statements and pay GST of 1/11th of your gross fares, less expenses to the ATO.
As well as remitting GST on earnings, you will also have to declare your net Uber income in your annual tax return. Uber earnings work like any other business income or contract work done under an ABN in that tax is applied at your marginal tax rate. It is important to plan for the tax payable on this income and to look at saving a percentage of earnings to cover the inevitable year-end tax bill.
There is a large range of expenses you can claim as an Uber driver to reduce your GST liability and income tax payable.
Expenses which relate to your motor vehicle include:
- Maintenance Costs
- Depreciation based on the original cost of your car
- Interest if the vehicle is financed
To claim these costs you must keep a logbook for three months recording all travel. After this period you can use the log book to calculate your work-use percentage and claim a proportion of car expenses based on this percentage. For full time Uber drivers the business use percentage will be high which entitles them to claim a large proportion of these costs.
Other expenses that could be claimable include mints and water for passengers, mobile phone costs and stationery.
In order to claim the above expenses you will need to keep appropriate records as evidence. A good start is to open a new bank account and only use it for Uber income and expenses. All relevant information for completing an annual tax return and quarterly BAS obligations will all be in one location. Don’t forget you must also keep all receipts.
If you are planning on doing some Uber driving to earn some additional income or you are already an Uber driver and have not considered your GST and income tax obligations it is highly recommended to see an accountant or tax agent. A tax agent can register you for GST, help prepare quarterly business activity statements, plan how much to save for your upcoming tax bill and lodge your tax return.
The ATO has recently stated that they are targeting Uber drivers for undeclared income and GST. They have access to third party data from Uber for matching against the income you declare. So if you are an Uber driver and haven’t got your tax affairs in order you should do so as soon as possible.
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Author: Rhys Frewin