Food delivered to your door… Australians are obsessed with the concept and the latest consumer findings have reported that Australia’s total food and beverage expenditure has tipped over the $272 billion mark in the past year.
What does this mean? The demand for contract food delivery workers through companies such as UberEATS, Deliveroo and Menulog are at an all-time high! But it is important to be aware of the tax obligations before starting work within this field as there are a few tax implications involved from a sole trader/contractor perspective.
Registering for an ABN
Working for a food delivery platform like UberEATS means you are classified as a contract worker, so it’s important you are aware of your obligations. You are required to register for an ABN which you can apply for online via the Australian Government Australian Business Register website. It’s free and fairly straight forward to register.
Registering for GST
Unlike Uber drivers who have different GST obligations to regular individuals, food delivery drivers including UberEATS follow regular legislation and are required to register for GST once your turnover within a given 12 month period is more than $75,000. Once you have received your ABN you can register for GST via the ATO business portal or over the phone 13 28 66.
Claimable Deductions
As per most sole traders, there are many deductions which you may be eligible to claim through your tax return as there are generally many outgoings incurred to generate business income through delivery services.
Here is a list of the most common expenses for delivery drivers which you may include to offset your income:
– Fees incurred such as UberEATS, Government charges and commissions
– Motor vehicle running expenses
– Tolls
– Parking
– Portion of your mobile phone bill
– Uniform such as a high visibility vest when riding or helmet
– Insurance
It is important if you wish to claim a deduction for any work-related expense incurred that you keep all receipts, diary records, or have transaction history on hand via bank statement to substantiate all claims made as the ATO may require proof should an audit take place. This includes having a valid logbook no longer than 5 years old.
PAYG instalments
As a contractor, it’s important you stay on-top of your tax obligations and put aside a portion of your income for the ATO. The easiest way to manage your tax obligations is to set up a PAYG instalment plan with the ATO, this way you can avoid a possible large tax payable result come tax-time due to paying nil tax during the year.
You can voluntarily set up and manage your PAYG instalment plan through your online MyGov account, its super easy to set up and will also help smooth out your cash flow during the financial year.
Keep a valid Logbook
It is common for delivery drivers who work fulltime to clock well over 40,000 kms in a year, which means motor vehicle expenses are usually the highest work-related expense claim. To maximise your deductions, it is advised for delivery drivers to hold a logbook so that all motor vehicle outgoings can be captured and added within your tax return.
The logbook method is based on the work-related proportion of expenses for the use of your car for work related purposes. This approach involves working out your business use percentage by keeping a running logbook for a minimum period of 12 consecutive weeks and recording odometer readings throughout the period to work out your work related percentage of your motor vehicle use.
Your logbook is valid for 5 years, therefore is worthwhile for you to invest some time in producing a logbook especially if you incur high motor vehicle costs due to work related travel.
You may claim a deduction for motor vehicle running expenses such as:
– Fuel
– Insurance
– Registration
– Interest on loan repayments
– Depreciation of your motor vehicle
– Repairs and maintenance costs
Although bear in mind the purchase price, principal repayments on any loans taken out to acquire the vehicle and improvement costs are not eligible for motor vehicle deductions.
*Please note: For all expenses claimed using the logbook method you must have substantiating receipts or transaction records to be eligible for a tax deduction.
DISCLAIMER: This article is general advice only. It does not consider your own personal circumstances and therefore may not be applicable to you. You should obtain professional advice and consider your own situation before acting on anything contained within our article.
If you are considering work within the food delivery industry and need further information about your contractor income when filling out your next tax return, get in touch with Ashley our customer service guru who will be able to lead you on the path to tax savings – get in touch.
