GST and Income Tax for Rideshare Drivers
Driving for a ridesharing service means that you are running your own business. Because of that you will have some tax obligations that you must fulfil throughout the year.
As a rideshare driver you are not an employee or contractor of your specific rideshare operator – whether it be Uber, DiDi, Ola or various others. Therefore, you are responsible for managing your own GST and income tax obligations.
Fortunately, if you have good records and a good accountant, staying on top of these obligations is not that difficult.
What GST Obligations Will I Have?
First up, you will need to have an ABN and be registered for GST from day one with the Australian Taxation Office (ATO). Normally businesses do not have to register for GST until they exceed or expect to exceed $75,000 in turnover (sales) annually, however, ridesharing drivers must be registered from the moment they start driving. This is the same obligation which traditional taxi drivers are subject to.
After you have registered you will need to lodge a Business Activity Statement (BAS) at least quarterly, if not monthly. The annual BAS lodgement option is not available to rideshare drivers.
Let’s take a simple example of how a quarterly BAS is calculated:
1/11th of your gross fares and tips for the quarter is the GST you have collected for the quarter (you owe this to the ATO).
1/11th of your total expenses (fuel, repairs, rideshare provider fees etc) is the GST you have paid for the quarter (and you can claim this back from the ATO).
Note that not all expenses have GST – for example, car registration does not have GST. It’s important to look at the tax invoice you receive for all expenses to ensure that it actually has GST before claiming it.
The net amount you owe the ATO on your BAS = GST on fares & tips minus GST on expenses
The rideshare operator will provide you with regular reports on total fares and tips collected, along with the fees you have paid to the rideshare provider. Conveniently, the rideshare provider also issues tax invoices to your passengers so there is no need for you to do so.
What Income Tax Obligations Will I Have?
When completing your income tax return, you will need to include all income earned from operating as a rideshare driver, including tips and bonuses, less all expenses you incurred in generating that income. This net income will add onto any other income you have during the year to form your taxable income and be taxed at your marginal rates as per usual.
What Deductions Can I Claim for my Car?
There are two different methods available for claiming motor vehicle expenses, the Logbook Method and the Cents Per Kilometre method. You can choose whichever one gives you the biggest tax deduction.
If you have kept a valid logbook (See below for more info on a valid log book), you can claim a percentage of your vehicle running expenses. Expenses you can claim a % of under this method include:
Servicing, repairs, tyres and other maintenance costs
Depreciation on the purchase price of your car (if you own your car)
Interest (if you have a loan on your car)
Rental/hire/lease fees (if you lease/rent your car)
Cents Per Km Method
If you haven’t kept a valid logbook you’ll be restricted to using the Cents per Kilometre Method.
You can claim 68 cents per kilometre up to a maximum of 5,000 km per year. This gives a maximum tax deduction of $3,400. You don’t have to have specific records of your kilometres, rather you can make a ‘reasonable estimate’ based on your patterns of work, diary notes, records from the company you drive for, etc. Note that you can claim the kilometres in between trips as well as kilometres while you have a passenger. You can also claim kilometres between home and your first trip, and from your last trip back home again.
If you’ve been driving more than just a small amount then $3,400 may be much less than your actual car expenses. This would give you a lower tax deduction and therefore a bigger tax bill. We recommend unless you are just an occasional driver you should keep a logbook so that you don’t miss out on claiming all of your expenses.
What is a Valid Logbook
A valid logbook records ALL travel for that vehicle for a representative, continuous 12 week period to determine the business percentage with can be used to claim all expenses for the same car for up to 5 years provided it is still representative of the actual use.
You don’t need to record each rideshare trip, just each rideshare shift.
The log book must go for 12 continuous weeks. It’s okay if the 12 weeks go past the 30th of June (e.g. you keep your logbook from May-July). But you must start before the 30th of June for it to count for the current year.
You must record the date, and the odometer reading of your car at the start and end of each shift/session of driving.
You should start your logbook when you leave home and switch on the app and stop when you arrive back home or switch off the app. Your kms to and from home, and your kms in between trips can all be included.
We recommend the Zions Pocket Logbook, which you can buy from Officeworks and newsagencies for less than $7. Using an app is also fine, as long as you are still recording your odometer readings – sometimes a low tech option like a book is still a great solution.
It’s important to note that the kilometre records that Uber sends you are not enough to meet the ATO’s requirements of a logbook, because they don’t show your car’s odometer readings. They also don’t include your kms in between trips, so you’ll be missing out on tax deductions!
Other Rideshare Tax Deductions
Other costs that may be deductible include:
Fees or Commissions paid to your rideshare provider
Other Fees – medical tests, police check, driver accreditation, driver training etc
Rider Amenities – water, mints, newspapers, tissues etc
Tolls – you can claim tolls while on trips and tolls in between trips as well
Cleaning Costs – for specific passenger related incidents you can claim the whole amount, but general cleaning costs must have your logbook percentage applied.
Safety Equipment – hi-visibility clothing and sunglasses.
Equipment and Accessories – dashcam, seat covers, mobile phone holder
Mobile Phone – you can claim a percentage of your mobile phone bill
Home Office Expenses – stationery, computer expenses, a percentage of your home internet bill
Bank Fees – but only if you have a separate bank account just for Uber
Costs that are not deductible include:
Clothing – clothing is personal expense
Personal Hygiene costs – deodorant, haircuts etc
Meals – you cannot claim for food or coffee for yourself
Fines – even if directly related to ridesharing
Driver’s Licence – your normal drivers licence is considered a private expense
If you have expenses that you’re not sure are deductible, keep the receipts anyway, and let your accountant advise you at year end whether they can be claimed or not.
As a driver for a ridesharing operator you will have unique tax obligations that you must fulfil. This applies for both GST and income tax. If you need any assistance with either GST or income tax, talk to your accountant.
For the best accounting advice talk to Link Advisors.