As an Uber driver, you are responsible for your own tax obligations and the income you receive will be taxed. This is further complicated due to the transparent nature of Uber’s platform, which we’ll discuss in more detail in a moment. Firstly, let’s make sure you don’t get caught short –
DON’T SPEND ALL YOUR INCOME
It’s essential that you don’t spend all your income, or try to hide income from the ATO. Uber’s platform enables the Australian Tax Office (ATO) to see what you’ve earned, as anyone who has received an Uber reminder from the ATO will know. Every quarter, you must lodge a Business Activity Statement (BAS) and pay GST on your income. Put aside around 30% of your gross income in your first year to give yourself a buffer and avoid an unexpected tax bill.
Not sure of your average income? You can log into your Uber partner account and go to the ‘Tax Summary’ tab. Every quarter you will receive a PDF of your earnings from Uber, including what Uber told the ATO you earned. There are also a couple of potential deductions, including your service fee and mileage, which needs to be worked using the relevant formulas.
DON’T HIDE ANYTHING
Again, the ATO already knows what you earned, and if the ATO thinks you’re trying to trick them then they’ll have the option of auditing you. Nobody enjoys a tax audit. Tax is a legal obligation and by attempting to avoid paying it, you’re breaking the law. In saying that, you should not pay any more than you have to…
…SO STAY UP TO SPEED ON THE RULES
Rideshare apps have been a nightmare for governments around the world. Defining the tax obligations for drivers came after the apps themselves were (finally) declared legal and therefore taxable. As a result, Uber tax rules are in a constant state of flux. Before you engage any tax professional, make sure they are experts in Uber and keep themselves up to date with the latest rule changes.
STAY ON TOP OF YOUR DEDUCTIONS
As with any business, what you can claim as a deduction is specific to your industry. For Uber drivers, there are repairs, tyres, parking expenses and mobile phone charges as just a few of the deductions you may be eligible to claim for. It’s important you keep track of these expenses in a simple, easy to refer to manner. It may be wise to take pictures of all your receipts and save them to a separate file on your phone. This way, you can download them when you need them, and have a digital copy for your records. Again, your rights and obligations can be changed what you can claim for is constantly being reviewed so make sure you are dealing with a taxation professional who knows what they are doing.
Being an Uber driver can be heaps of fun, and give you the chance to earn additional income and run your own business. However, it’s important that you take your tax obligations seriously in order to avoid unpleasant financial surprises or an ATO audit.