With various employment opportunities through ridesharing apps such as Uber, Ola and Taxify just to name a few, plus the flexibility of work hours, ride share work within Australia can seem like highly attractive full time work for some. It is also a great avenue for some extra cash for all those ‘wants’ in life as a second income stream through casual work. However it is super important you have a sound understanding of what’s involved including managing your finances and your tax obligations as a rideshare provider. Here are our ride share tax return tips to help you out.
The income you generate from driving for rideshare providers such as Uber is considered assessable income and therefore must be declared within your tax return. All expenses which you incur can offset this figure so it’s vital you keep up-to-date with your record-keeping to make the process a whole lot simpler.
Common claimable rideshare expenses include:
- Uber fees & other charges
- Government charges
- Portion of your mobile phone bill (remember only your work-related percentage of use is claimable)
- Cleaning costs
- Bank fees if you operate on a separate bank account for your sole trader income
Motor Vehicle Logbook
As an uber driver, your car is your main source of income and also your largest running expense so having a valid log book is highly advantageous for tax deduction purposes as you can claim all costs incurred including fuel, repairs and maintenance, insurance, interest on a car loan, motor vehicle registration and depreciation costs for work related use of your motor vehicle. Keep in mind for all expenses items you include you must have records to substantiate your claims as per ATO guidelines.
The logbook approach involves working out your business use percentage by maintaining a record of your running MV odometer reading for a minimum period of 12 consecutive weeks, this will work out your work-related percentage of use of your motor vehicle. Your logbook is valid for 5 years, therefore it is definitely worth your while to invest some time in producing a logbook.
To learn more, read our blog post on Motor vehicle & travel expenses here.
Uber Drivers & Compulsory GST Obligations
Although Sole Traders are not obliged to register for GST with a turnover of less than $75,000 within a 12 month period, GST requirements for Uber drivers are slightly different so it’s very important you understand your goods and services tax obligations.
As an uber driver you are required to register for GST with the ATO from the very first $1 you earn, which means you need to withhold the GST portion of your income and submit quarterly BAS’s (Bank Activity statements) with the taxation office.
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 any possible tax payable results 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 so its super easy to set up and will also help smooth out your cash flow during the financial year.
If you are considering to start work ridesharing or currently employed within the rideshare sector and want some extra information regarding your tax affairs or have any general queries, please feel free to contact us.