Thousands of people have taken to driving for Uber or other similar ride-share services, some of them simply to top-up their current income and some of them seeking a new living as they deal with the after-effects of COVID-19 on their old jobs.
If you’re an Uber driver, there are numerous tax obligations (and opportunities) you may not be aware of.
Also read: Shares and tax: What you need to know
It’s best to talk to a tax agent, like H&R Block, for personalised advice but here are some general tax tips:
Reporting income in your tax return
The income you earn from driving for Uber is assessable income and must be reported in your income tax return.
Claiming work-related deductions
Expenses incurred in driving for Uber will be tax deductible.
These may include expenses that relate to holding, maintaining or operating any assets used to provide the ride services.
Deductions can be claimed for the business use proportion of the following:
Commissions, licensing or service fees paid to Uber.
Costs of becoming an Uber driver - once you’ve started the official application process - such as medical and police checks, application fees etc. Costs incurred before becoming an Uber driver, or before the application process starts (such as attending information nights) are not deductible.
Passenger costs, such as water and mints or fuel for the car
Vehicle licensing or registration
Mobile phone bills
Safety equipment, such as hi-vis vests
Costs of cleaning, servicing and repairing the vehicle
Tax agent/accountant fee
Bank fees (if you maintain a separate account for your Uber work)
Work-related deductions cannot be claimed for:
Costs of a normal driver’s licence
Fines (parking, speeding, etc)
Clothing other than safety clothing
Meals, drinks, etc purchased whilse on shift
Claiming a deduction for business use of your car
There are two ways to claim a deduction for business use of your car:
Cents per kilometre: Claim 72c per kilometre. This method is only available for distances up to 5,000km. You can’t use it if you cover more than 5,000 business kilometres. Your claim incorporates all car expenses, including petrol, servicing, depreciation, etc. You can make no further claim.
Logbook: Your claim is based on the business use percentage of each car expense, which is determined by a log book that must have been kept for a minimum 12-week period. This log book must be updated every 5 years. You can claim all expenses that relate to the operation of the car, at your percentage of business use, as established from your logbook.
Claiming temporary full expensing for capital assets
As an Uber driver, the ATO sees you as self-employed. That means you have access to all the tax concessions available to small businesses, including the immediate write-off of all capital assets, which is available until 30 June, 2023.
That means you can immediately deduct the cost of any plant, tools or equipment you use in your business, including items such as computers and even motor vehicles, provided the cost is less than $60,733, which is the limit for expensive cars (very handy for Uber drivers buying new or second-hand cars). You may need to apportion the cost of a vehicle where it is used for private or domestic use, as well as business use.
Registering for GST
If you’re an Uber driver, you must register for GST with the ATO and charge GST on all your fares, from the first dollar. You can also claim GST credits on your work-related purchases. You will need to submit a BAS form every quarter.
Being registered for GST because of your Uber activity may impact on the GST status of other business activities you undertake. So, if you run a small business as a sole trader with a turnover of less than $75,000, you may have to start accounting for GST in relation to that business as well as your Uber driving.
Get your taxes right
The ATO is cracking-down on both GST and income tax avoidance by obtaining details of payments made to drivers who operate ride-sharing services (the vast majority of whom are Uber drivers) through bank accounts held by their “ride-sourcing facilitators” (typically, Uber).
The ATO has requested data, including the following information:
Payee account name
Payee account number
Date of payment to the payee, and
Amount of payment to the payee
The ATO will then match this data with its records with a view to identifying Uber drivers who are not disclosing their ride-sharing income, not paying income tax or GST on that income or in some cases, not lodging tax returns or BAS forms.
If you need help or advice, remember to talk to a tax agent, like H&R Block, with experience dealing with ride-share drivers.
Mark Chapman is director of tax communications at H&R Block.