Uber driver tax return, How to lodge and deductions

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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
● Repairs
● Registration
● Insurance
● 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?

Apart from income tax, Uber drivers also need to meet Goods and Services Tax (GST) obligations.

Uber drivers are required to register for an Australian Business Number (ABN) and for GST. This is the case even if your turnover is less than $75,000.

This means you’ll have to register for GST and charge customers GST from the get-go, but you’ll be able to claim credits on the GST you paid on business-related purchases.

Then at the end of every quarter, you must report your GST activities on a BAS statement and lodge it with the ATO.

The GST you owe the ATO is the amount of GST you received from fares less the GST you paid for business purchases.

Note that if you have multiple businesses, your Uber driving could change the GST status of other businesses you run.To understand how this applies to your situation, it’s best to speak to a professional tax accountant such as POP Business – we’ve got both the knowledge and expertise to help you stay compliant.

Best tax software for Uber drivers

Thriday is a valuable tool for Uber drivers, ensuring timely and stress-free tax filings. This platform simplifies the tax process end-to-end, automating calculations and digitally storing receipts and reports. With Thriday, Uber drivers can efficiently navigate their tax obligations, saving time and ensuring compliance, allowing them to focus on their driving without the burden of complex financial admin.

With the need for complete records and diligent bookkeeping to meet tax requirements, you might like to consider using accounting software to both save time and reduce stress.

Cloud accounting software like Xero is cloud-based, meaning you can run your business from any device and everything is backed up automatically. To boost efficiency and accuracy, simply download bank feeds to cut back on the need to type things in manually. What’s more, there’s a range of apps available to help you store and manage important files and receipts, so you can stay organised with relative ease.

Is having an accountant for Uber drivers a good idea?

Apart from connecting to cloud software, you may also benefit from consulting an accountant regularly.

An Uber tax accountant is able to help you figure out how much of your turnover you
should save toward your taxes and show you a sample tax return for Uber drivers so you can approach yours with confidence.

He or she could also lodge BAS statements on your behalf, discuss ways to optimise your tax position and ensure you claim all the tax deductions you’re entitled to.

Although there are costs associated with getting professional advice, it might set you back less than you think. POP Business offers a membership service which gives you affordable on-demand support starting from $99/month.

And if you’re interested in running your business using cloud accounting software like Xero, POP can get you connected at a 20% discount too.

Final word

We’ve covered a lot in this article, including how to pay tax uber drivers are liable for, potential tax deductions you might claim and the importance of keeping records.

Remember, Uber won’t be withholding any taxes on your behalf or giving you any advice on how to do things right. So save for your tax bill as you go and speak to a professional at POP if you need a hand!

Picture of Patrick Sargent

Patrick Sargent

I am a chartered accountant, registered tax agent and a co-founder and CEO of POP. My passion lies in creating high-performing teams, optimising business processes and leading the strategic direction of the business. I am also a member of Chartered Accountants ANZ and a Fellow of the Australian Institute of Company Directors. My expertise includes helping small businesses with a range of accounting services, including: tax preparation, business advisory, accounting and bookkeeping, and personal tax planning, as well as company, trust and partnership tax returns and more.

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