When driving for Uber, you are not an employee of Uber; instead, you are an entrepreneur (on a contract). Hence, it's essential, and you become careful that your tax dealings are adequately managed. That's why it is imperative for most Uber drivers to use a tax agent.
The tax implications of ATO’s Uber are straightforward at the primary level:
- All the money you earn while driving on Uber counts as income, which means you have to report it on your tax return.
- Even if you make less than the $75,000 GST limit, you must register for the GST as an Uber driver. (More on that below ).
GST obligations
Since August 2015, the ATO has confirmed that all Uber drivers must register for the GST. This means that you are to send the portion of your Uber fares to the ATO. It is in addition to the tax that you must pay for the income you earn as a driver.
Uber is currently challenging this "ATO GST Uber Tax" problem in court, but for now, if you're driving for Uber, it's better to be safe than to be sorry in the long run.
Uber drivers must register for the GST, then begin sending a quarterly BAS statement, and also pay the GST obligations. If you do not, you are looking for problems with ATO, and it is unlikely that Uber will help you solve your problems. ATO staff; It is not like the government transport tickets that Uber sometimes covers.
Tax obligations
You must report the income generated in the tax year on the tax return if you are an Uber driver.
Here is a critical warning: Do not spend all your income from Uber.
Especially if you are an Uber driver, in addition to other jobs, it is essential to keep a good part of your income with Uber.
Want to know why? As your income increases due to your Uber driving, your tax bill also increases. If you do not save, it can be a bad surprise when it is time for taxes. During your first year of driving on Uber, you should be able to set aside 30-40% of the amount you earn from Uber.
You will be required to provide a Business Activity Statement (BAS).
Do you need help predicting how much you should save? It's not that easy, that’s why you should contact a tax agent. And if in doubt, keep a little more; It is better to get a tax refund than to owe money to the ATO.
Tax advantages
There seem to be numerous tax deductions that you can claim as an Uber driver. These are just a few of the work-related expenses that become deductible when driving on Uber:
- Registration
- Insurance
- Replacement
- Tires
- Car maintenance
- Car cleaning costs
In addition to these expenses, you can claim additional costs directly related to becoming and operating as an Uber driver such as:
- Registration fee as Uber driver (registration fees, medical and police exams, etc.)
- Work-related parking fees (keep receipts and add or request up to $200 per year for parking fees of less than $10 each)
- Special cleaning fees (car wash, carpet cleaning, etc.)
- Mint and water for passengers
- Mobile costs
- Significant Subscription Fees for Spotify, Youtube Red, Pandora or Apple Music
- Stationery
Record Keeping
To lay a claim any of the above deductions, you must be aware. When it comes to asking for costs directly related to your vehicle, you must keep a record as you would for any other work.
You should keep a logbook for all the miles you drive. This allows you to calculate the portion relating to the use of your car in a manner respected by ATO. So you can apply for a wide range of vehicle expenses.