If you’re about to embark on a ride-sourcing side hustle, or have already started one, then you might be wondering how you can keep your Uber driver tax return right without getting on the wrong side of the ATO.
Uber makes it clear that its drivers are not employees or contractors. Instead, the company calls each driver a “driver-partner” – someone who independently provides transportation services through their own business.
And if you’re operating a separate business, then getting your taxes right is YOUR responsibility.
But we know that dealing with the ATO and complying with tax obligations can be stressful for many drivers. To help, we’ll explain key Uber driver Australia tax rules in this article, so you can get to grips with ATO requirements and find out about opportunities to lower your taxes.
How to file tax return for Uber drivers
New drivers often ask whether they need to pay tax on their ride-sourcing income.
The short answer is yes – income you earn from driving for Uber is assessable.
In terms of how to lodge Uber driver tax return, you’ll need to complete the tax return for individuals, as well as the supplementary section and the business and professional items schedule.
A tax return for individuals is designed to capture your financial activities from all sources, so this is where you can report both your Uber driving income and costs for the financial year in question.
You’ll then pay tax on your total net income at your personal tax rate.
Before we go further, it’s important to point out that you’ll need to set aside some of your Uber income as tax to be remitted to the ATO. Not saving for your tax bill could lead to serious cash flow problems when tax time comes!
Top tax deductions Uber drivers should know about
Now, let’s turn our attention to deductible Uber driver expenses for taxes.
Essentially, you can deduct costs you paid to provide ride services against your income, which will in turn lower your tax bill.
Typical costs you can claim include:
● Car and tyre maintenance
● Cleaning – such as car washes and carpet washes
● Application fee to become an Uber driver
● Commissions, licensing or service fees paid to Uber
Even things like water and mints for passengers, mobile phone and internet costs, Spotify, Pandora or Apple subscription fees, parking charges, tolls and stationery could potentially be tax deductible.
But in order to claim these tax deductions, you’ll need to keep proper records and separate your personal and business expenses.
You should also keep a logbook of all the kilometres you drive in order to work out how much of your car usage relates to your Uber business. You can then claim eligible vehicle expenses at the percentage of business use you’ve calculated.
Costs you can’t claim on Uber driver tax return
The following costs are not eligible for a tax deduction:
● Parking or speeding fines
● Meals and drinks you buy during shifts
● Clothing (apart from protective clothing)
● Standard car driver licence fee
What about GST?