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Buying A Car For Uber
As an Uber Driver, your car is your most critical business asset, so the decision to buy a car for Uber is an important one. Perhaps you’re looking to start driving but your current car doesn’t meet Uber’s requirements. Perhaps you see yourself driving for Uber longer term so it’s time to upgrade. Or perhaps you just need a new car, and driving for Uber is a fantastic way to help with the cost. In all of these cases it’s important to understand the tax implications before you buy a new car for Uber.
Also, we know that Uber drivers are eligible for the Instant Asset Write-Off, but did you know this deduction can come with a nasty sting in the tail? Claiming the Instant Asset Write-Off isn’t always the best option for Uber drivers. So before you decide to buy a new vehicle for Uber, you need to have a clear picture of how it works and how much you’ll actually get back on tax.
This article aims to cover all the essentials of claiming GST and tax deductions when you buy a car for Uber.
First Considerations
A common misconception to clear up right away is that you’ll ‘get it all back on tax’. This is not the case. When you claim a tax deduction, you only get back some of the money you spend. For example, if your taxable income is between $37k and $87k you’re in the 34.5% tax bracket, so you’ll get back 34.5 cents of every dollar you spend. The other 65.5 cents comes directly out of your pocket. If you’re in the $18k-$37k tax bracket you’ll only get back 21 cents in the dollar and pay 79 cents in the dollar yourself. So although you will receive some tax benefits for your new car, the bulk of the cost will come from your pocket.
Another important consideration is that many drivers don’t make as much money as they first expect, especially after taking into account income tax, GST and car running costs. Be sure to evaluate whether you can still afford your car even if you make less than you expect from Uber driving.
If you’re not sure yet whether you’ll drive Uber for the long term, but your current car doesn’t meet requirements, a great option is to rent a vehicle and try Uber first before committing to a car purchase or a loan. There are a number of rental companies that specialise in renting to Uber drivers. We highly recommend Splend for their exceptional member services, including driver training and strategic advice, fuel discounts, and networking opportunities with other drivers.
Here are a few more common questions about buying a car:
- New or Used? Tax-wise, it makes no difference. You’ll claim the same percentage rate of depreciation on the purchase price regardless of whether the car is brand new or used.
- Dealer or Private Seller? Buying from a dealer is usually a little more expensive because they provide benefits such as a statutory warranty, so you’ll need to decide if this is worthwhile for you. From a tax perspective, if you buy from a dealer the cost of the car will include GST, which you can claim back from the ATO. So if you’re comparing a dealer car to a private sale car be sure to take into account the GST you’ll get back from the dealer car. More on how to calculate this below.
- Can I Get The Instant Asset Write-Off? The Instant Asset Write-Off is available to businesses with turnover below $50 million so all Uber drivers will be eligible. But the Instant Asset Write-Off isn’t always beneficial. Scroll down to read more on claiming depreciation on your new car.
Financing Your Car
There are many factors to consider in choosing how to finance your car for Uber, including affordability of repayments, how long you plan to drive for, and whether your circumstances allow you to apply for a loan. These questions are best discussed with your finance broker, who should be able to provide you with calculations comparing options for financing your Uber vehicle, including a loan vs lease analyses.
The way you choose to buy and finance your car will also affect the way you claim tax deductions. For example, the timing of tax deductions for a loan vs a lease are very different:
- Buy Car & Take Out a Loan: If you purchase your car directly and take out a loan, your depreciation and interest deductions will be largest in the first year and diminish over time. If you purchase your car from a dealer you’ll also receive a lump sum refund of GST on your next BAS.
- Lease or Rent a Car: If you lease or rent a vehicle, your tax deductions and GST claims are spread evenly over the life of the lease, rather than being ‘front-loaded’. You’ll claim the GST back on your lease/rental payments quarterly, and claim a tax deduction for your lease repayments for the year (excl GST) on your tax return. Since you don’t own the vehicle directly you won’t be eligible to claim depreciation or the Instant Asset Write-off (more on this below). Here’s more on Renting a Car for Uber.
- Salary Packaging: If you salary package a vehicle through your employer, you’ll receive all of your tax benefits through the package. This means you cannot also claim tax deductions for those expenses in your tax return, as this would be ‘double-dipping’. You can still claim GST and tax deductions for any expenses that are not packaged (i.e. paid out of your own pocket), but you must keep a logbook to be eligible.
As you can see, from a tax perspective the biggest difference is that with a loan your tax benefits are ‘front-loaded’, while if you lease/rent a car the tax benefits are spread evenly over the lease/rental period. So when choosing which of these suits you best consider how long you expect to drive for, whether you plan to upgrade the car in few years or car or keep it long term, and your immediate cashflow needs.
Claiming GST on a New Car For Uber
If you purchase your car from a dealer, the purchase price will include GST. If you are registered for GST on the date of purchase you can claim back the GST on your Uber vehicle on your next Business Activity Statement (BAS). The amount of GST you’ll get back will be a little less than 1/11th of the price of your car (because some on-road costs don’t include GST) multiplied by your business-use percentage. Note that a logbook isn’t required for GST claims, instead the ATO allows you to make a reasonable estimate of your business use percentage. The logbook is required for your end of year income tax though, more on this below.
Remember that to be eligible to register for GST, you must have actively started the Uber application process to prove that you are ‘running a business’. If you plan to purchase a car and you haven’t yet registered for GST, we recommend that you start the Uber driver application process BEFORE buying your car in order to prove your eligibility for a GST Registration. Then download our free Uber Tax Info Pack in order to access our free GST Registration service. We’ll submit your GST Registration application to the ATO for you for free.
Other Situations:
- Purchase from Private Seller: If you purchase a car privately, there is generally no GST on the purchase price, as the seller is not registered for GST. This means there is no GST to claim back on the purchase of the car, because you did not pay any GST in the first place.
- Lease or Rent: On your quarterly BAS you’ll claim back the GST on your lease/rent payments multiplied by your business use percentage.
- Salary Packaging: In a salary packaging arrangement your employer owns the car and pays the expenses, so they are the ones to claim the GST credits. However this is taken into account when working out the amount that is deducted from your pay, so you still indirectly receive the benefit of the GST credits. If you pay for fuel, cleaning or any other running costs out of your own pocket (i.e. outside of the salary packaging) you can claim the GST on these expenses on your BAS.
Claiming Tax Deductions on a New Car For Uber
Instant Asset Write-Off
*Update* From the 12th of March 2020 to the 31st of December 2020 the Instant Asset Write-Off has been temporarily increased to $150,000. However there is a general limit for claiming depreciation on cars which effectively caps this threshold to a substantially lower figure, $57,581 for 2020 or $59,136 for 2021.
The Instant Asset Write Off is currently scheduled to change to $1,000 on the 31st of December 2020. If you want to claim this (remember it’s not always the best choice, read below for why) your car must be DELIVERED by the 31st of December.
If your business turnover is under $50 million and you have kept a valid ATO-compliant logbook, then you will be eligible for the ATO’s Instant Asset Write-Off. The Instant Asset Write-Off allows the full cost of assets under the limit to be claimed entirely in the first year (subject to your logbook percentage) rather than being depreciated over a number of years. The Instant Asset Write-Off cap has been temporarily increased to $150,000 until the 31st of December 2020, prior to this is was $30,000.
Having said this, the ATO have a specific cap for car depreciation, $57,581 for the 2020 financial year and $59,136 for 2021. These are the maximum amounts you can claim the cost of a car, regardless of whether you claim depreciation or the write-off. If you buy a car costing more than these amounts the ATO will that these amounts as being the car cost for depreciation purposes.
Also keep in mind though that even if you do claim the Instant Asset Write-Off you may not get to use this whole tax deduction. If your tax deductions (including the write-off) are more than your Uber income for the year, this will mean you have a loss, rather than a profit. This means you’ll pay no tax on your Uber income for the year, which is great. But you cannot claim the remaining loss against your employment and other taxable income unless your Gross Uber Income for the financial year is over $20,000 (excl GST). If it’s not, then your loss will be ‘carried forward’. This means it can only be claimed if either you have Uber profits in future years, or if your Gross Uber Income exceeds $20,000 (excl GST) in a future year.
It’s important to recognise that the Instant Asset Write-Off comes with a sting in the tail. When you sell the car or stop driving for Uber you must pay income tax on the sale price/market value of the car, subject to your logbook percentage (you can read more on tax on selling your car below). Therefore we only recommend claiming the Instant Asset Write-Off if you plan to drive for Uber for a number of years, or if you have a high Uber tax bill in the current year to make the Write-Off worthwhile.
If you have your tax return prepared by DriveTax we will always explain your options and discuss the trade-offs before claiming the Instant Asset Write-Off. If you’ve bought a car during the financial year, we recommend having your tax return prepared by DriveTax or another registered tax agent and discuss the consequences of this claim to make sure you don’t get caught by surprise in the future.
Small Business Depreciation
If you cannot or choose not to claim the Instant Asset Write-Off, then your next choice is normal small business depreciation. This allows you to claim a flat 15% of the purchase price in the first year (with no apportionment for the number of days), and 30% of the written down value every year after that. Remember you must have a valid logbook if you want to claim any kind of car expenses, including depreciation.
Other Ownership Options
- Lease or Rental: You can claim a tax deduction for the cost of your lease/rental repayments (excl GST) for the year multiplied by your logbook percentage. You cannot claim the cost of buying the car itself, because technically it is the lease/rental company who purchased the car, not you. Here’s more on Renting a Car for Uber.
- Salary Packaging: You cannot claim a tax deduction for salary packaged expenses, because you have already received the tax benefit through the salary packaging. You can claim any expenses you pay for out of your own pocket (i.e. outside of the salary packaging) as long as you have kept a logbook.
In all of the above situations, you MUST keep a valid ATO-compliant logbook to claim these deductions. Otherwise you cannot claim the instant asset write-off, depreciation, loan interest, fuel or any other car running costs, and you’ll instead be limited to just the cents per kilometre method, which is a maximum tax deduction of $3,400. See our blog post on Tax Deductions for Uber Drivers for more information on keeping a logbook.
Selling Your Uber Vehicle
If you are selling your old car, trading it in or you stop driving for Uber, and you claimed that car as a business asset for Uber (i.e. you claimed depreciation and other tax deductions), then you must pay tax on the sale. Alternatively, if your old car was never used for Uber, or was only used briefly tax doesn’t apply.
If your car is considered a business asset, you’ll pay GST of 1/11th on the sale price on your next BAS (even if you sell the car privately). Then, on your end of year tax return, you must make a ‘balancing adjustment’ on the difference between the depreciated value of car in your tax return and it’s actual sale price. This is best explained with an example:
- Purchase price = $10k
- Depreciation claimed over time owned = $3k
- Written down value = $10k – $3k = $7k
- Sale Price = $8k (excl GST)
- Depreciation Overclaimed = $8k – $7k = $1k = taxable Balancing Adjustment to be taxed at your marginal tax rate
In the eyes of the ATO, you have claimed $3k of depreciation but based on the sale price we now know it actually only depreciated $2k. Therefore you must declare the $1k of depreciation that you ‘overclaimed’ as taxable income to bring things back into balance. This works in reverse too. If you sell your old car for less than its written down value this means you have under-claimed depreciation, so you can claim a tax deduction for the difference.
A note for those thinking of claiming the Instant Asset Write-Off on a new car. Once you claim the Write-Off, the written down value of the car is immediately reduced to $0, as you’ve claimed all the depreciation up front. This means that when you either sell the car or stop driving for Uber, the taxable balancing adjustment will be the whole sale price/market price of the car, subject to your business use percentage of course. This can add quite a chunk to your tax bill, especially if you’re not claiming a new car to offset it. We recommend you always seek tax advice before claiming the Instant Asset Write-Off.
Other FAQ’s
- Name and ABN on the Invoice: For GST purposes, for a purchase over $1,000 your ‘identity’ must appear on the invoice. This can be either your name and address, or your ABN. Otherwise you cannot claim GST on the purchase of your car.
- Invoice for a Private Sale: The ATO understands that when buying a car privately you won’t get a formal tax invoice. You should instead write your own receipt for the purchase of the car, showing the name, address and contact details of both you and the seller, the purchase date, price, and registration number or VIN number. Both of you should sign and date the receipt. You should also keep copies of bank statements or bank cheques or other proof of payment.
- Buying in a Spouse’s Name: The ATO’s rules are inconsistent on this. For income tax the ATO accepts that spouses often register assets or pay expenses on behalf of each other or in each other’s names for various reasons. So as long as the vehicle is genuinely for your Uber driving you can still claim depreciation in your tax return. The same is true for any running costs that your spouse pays for. GST is different, for expenses over $1,000 you can only claim GST credits if your name appears on the invoice. Therefore if you are purchasing a car from a dealer and wish to claim for GST you should make sure the car is in your name.
- Business or Private Registration and Insurance: The ATO doesn’t care whether you register or insure the car as business or private, you can claim tax deductions either way. You should find out the requirements of your insurance company and the road traffic authority in your state to determine how you should register and insure your car.
What Next?
- Make sure you can afford the car even if you earn less from Uber than you expect
- Decide whether a loan, lease or rental is best for you, and chat to a finance broker if you need help
- If you need to register for an ABN or GST (or you just want to learn more about your tax obligations), download our free Uber Tax Info Pack
- Start a logbook. Read our blog post on Claiming Tax Deductions for more information
- See our BAS Services Page for help lodging your BAS’s to claim back the GST on your car purchase
- If you’d like to learn more about buying a car for Uber, including how to calculate depreciation, and how to lodge your own BAS and tax return, check out our online course Understanding Uber Taxes.
Thoughts? Questions? Leave a comment below and I’ll respond shortly! – Jess
The information in this article is general in nature and does not take into account your personal circumstances. If you’d like to know how this article applies to you, please contact us to arrange a consultation, or talk to your accountant.
About the Author – Jess Murray CPA – Uber Accountant
Jess Murray is a CPA Accountant and registered tax agent. She’s been working in personal and small business tax for 13 years, and has been specialising in tax for Australian Uber Drivers for the last 5 years as the Director of DriveTax. She also teaches an online course called Understanding Uber Taxes.
Jess is on a mission to make taxes straightforward and manageable for Uber drivers across Australia.
Very helpful article, thanks? My question is to claim the instant asset rite off, does the car need to be purchased in the current year? I have a 2 year old car and starred Uber eats last August. Do I orkout it’s depreciated value then write off the balance x log book rate?
Hi Ramona, yes that’s exactly right. You would work out the depreciation from purchase date until you started Uber using the diminishing value method at 25% (the depreciation rate for cars), and then based on that depreciated value you can start small business depreciation or the instant asset write-off. – Jess
Thank you, spoke to an accountant who was adamant you couldn’t do this.
Hi Ramona, here’s the link from the ATO: https://www.ato.gov.au/Forms/Guide-to-depreciating-assets-2019/?page=7#Decline_in_value_of_a_depreciating_asset – Jess
Hi Jess,
I am doing part time Uber under ABN Sole Proprietor. I plan to buy a 2 years old used car for Uber at the price of $13,000 and the purchase will be made before end of financial year FY2019/2020 . Please help to comment on the following:
1) In order for me to claim the GST input tax on the car purchase sum (in BAS for April to June 2020) and also car related expenses in the future quarters’ BAS, is it compulsory to state my ABN number In the tax invoice from used car dealer or just the name will suffice?
2) Do I need to register the car under ABN in order for me to charge out vehicle related expenses (such as vehicle depreciation, fuel, maintenances etc)?
3) As the car which I am going to buy is a 2 years old used car, how shall go about on depreciation?
Thank you in advance for your help.
Hi Eric, for expenses over $1,000 in order to claim GST the tax invoice must show the buyer’s identity (i.e. name) or ABN. The ATO does not look at the registration when determining deductibility so it doesn’t matter for example if it is registered in a friend or family member’s name, as long as it actually ‘belongs’ to you in a practical sense, for example it’s parked in your driveway, available whenever you need to use it etc. Calculating depreciation is a complex topic that’s too detailed to explain here. You can learn more on the ATO’s website or in our online course Understanding Uber Taxes. – Jess
Hi Jess,
Thanks for your prompt reply.
I have another question on depreciation which I hope you can help to address.
Considering it is a 2 years old used car with 6 years driving life for Uber remaining, which is the best depreciation method to use? Simplified depreciation for small business or General depreciation rules – prime costs method? Can you help to elaborate further on each method?
If using General depreciation rules – prime costs method, do I depreciate the costs of $13,000 over 6 years (16.67%) considering 6 years is the remaining life of the vehicle use for Uber?
FYI, I do not intend to apply instant asset write off as my income from part time Uber is low.
Thanks!
Hi Eric, you would need to calculate each depreciation method in order to find which one gives you the largest deduction, as it depends on the timing of your purchase. The effective life of a vehicle is 8 years, but remember you get double depreciation using diminishing value rather than prime cost. Or small business depreciation is a higher rate again. These topics are too complex to go into detail here. Please refer to the links I provided, or for personalised tax help you may like to consider our 6 Month Unlimited Email Support Package and then I can run the calculations for you. – Jess
Hi Jess,
I am planning to buy a car from my wife and transfer into my name for Uber. I have set up a company to do Uber. Can I transfer the car to my name rather than company to exempt from transfer duty and still claim the instant asset write off from the company taxable income?
Hi Malcom, I generally would not recommend using a company for Uber, they are much more expensive accounting-wise and if Uber is your only income you may end up paying more tax in the company rather than in your personal name. If you need personalised advice on this you can contact me via our Tax Advice Package. I can’t comment on stamp duty as it’s different from state to state and it’s done through your state’s roads authority not the tax office so not my area of expertise. From a tax perspective if the car is owned in your personal name then you would claim the deductions in your personal tax return, but you would need income to claim it against, so the company would have to pay you wages, meaning PAYG Withholding and Super. Also you could not claim the GST on those expenses since you would not be GST-registered yourself. Or if it is owned in the company name then the company can claim the tax deductions and instant asset write-off and also the GST, but then you would have to pay Fringe Benefits Tax on any personal use of the vehicle. Both options come with complications! Generally speaking the simplest and cheapest option for most people is to do Uber in your personal name as a sole trader. – Jess
Hi Jess,
For a new car log book, do I need to start the log book immediately after the purchase or just before June 30? I’m going to claim the instant asset write off.
Thanks in advance
Hi Mike, as long as the logbook starts before 30 June and runs for 12 weeks it will be eligible. It’s no problem if it runs over into next financial year, as long as it covers at least one day of this financial year. – Jess
Hi Jess,
Thank you for your valuable information and the effort and clarity you put into your explanations. The questions on this forum regarding acquiring a vehicle are based around renting, leasing, loan, etc. Would you recommend someone if they are in a position financially to purchase a vehicle outright to use for Uber, i.e. not financed in any way, a sound strategy (from a taxation perspective)? Assumption is 100% business (Uber) use, vehicle value $40-$45K. Does other earned and investment income come into the equation as well when considering the best way to purchase a vehicle for Uber use? Thanks in advance for your thoughts.
Hi Brian, thanks for the great feedback! Purchasing outright is always cheaper than financing. If you get a loan and pay interest you can claim a tax deduction for that interest, but the tax deduction is only at your marginal tax rate. So for example if your marginal tax rate is 34.5% (incl Medicare Levy) for $1,000 of interest you only get $345 back on tax, the rest comes out of your own pocket. So if you can avoid that cost you’ll definitely be better off. You will need to weigh this up against the cashflow benefits or a loan or lease that allows you to pay over time, especially right now when interest rates are so low. This is a personal decision that only you can make. I hope this is helpful! – Jess
Thanks Jess, appreciate your prompt reply.
Hi, I’ve just purchased a car from a private seller for using it for uber. If I want to claim the full amount in my tax return then how much I can claim. May I claim full car amount of car value even my income from uber will less than the actual purchase value as I have gross income from another job as well. Thanks
Hi Gagan, you can claim a deduction for the price of the car multiplied by your logbook percentage. If the cost of the car is under the instant asset write off threshold you can choose whether to claim the cost upfront or depreciate it over time. Or if the cost of the car is over the instant asset write off threshold you cannot claim it upfront, you must depreciate it. But if you only have low income from Uber then it may make sense to claim depreciation rather than the write-off anyway. The strategy is more complex than what I can explain here, but I hope this gives you some information to start with. If you decide to lodge your tax return with us we would work through it all with you at tax time, or you can learn about how depreciation works in our online course. But the main thing for now is to keep a logbook. Enjoy your new car! – Jess
Hi Jess
What is best for tax purpose? A totally separate car for Uber and family car with novated lease? or just one car under novated lease that will be used for Uber part time?
Thank heaps.
Rick
Hi Rick, it’s not really possible to answer this question for sure without fully calculating the exact costs of both options. But with two cars there would be two sets of registration, two sets of insurance, two sets of annual servicing, and two assets loosing value from depreciation. Even though you’d get some of it back on tax, I would guess that this would outweigh any tax benefits. As I said though, without knowing your personal circumstances this is only a very generalised answer. – Jess
Hi Jess,
Great article, commendable.
I keep reading this fact that you can only claim GST on Car price if you’re (were) registered for GST before purchase.
I started driver-partner process with Uber in May 2019 with old car (2010 model with 1year of ubering left) but didn’t complete registration process because there wasn’t enough Uber-time left on the car.
So I sold my old car and bought brand new Car in Aug 2019 with the sole intention of driving it for Uber, and during the process I was told by Uber that I have to register for GST in order to drive with Uber.
I had no idea prior to purchasing new car that I’ll need to register for GST.
Question is, I registered for GST after purchasing new car which is being driven for Uber 96% of the total use (based on completed logbook).
Can I still claim GST as well as Income tax write off on the price of vehicle.
Car is on three year secured finance.
Thanks Much!!
Hi Ben, you will need to backdate the start date of your GST-Registration to the date you purchased the car in order to be able to claim it. Since you had started the Uber application process before that date I’m sure the ATO will be fine with backdating. Don’t forget our free GST Registration service as part of our free Uber Tax Info Pack. – Jess
HI Jess ,
I drive a Uber part time – use the same car for personal use : 40% (200km) and for uber 60% ( 300km) in a week I do have log book .
My question is I am register with Uber at 2016 also registered for GST/BAS used the same car till Dec 2019 , all my bas is up to date …….sold the car for 6.5K inc gst then bought a car for 24K in Dec 2019. At the point of selling my old car and purchase my new car i was register for uber as business and gst bas etc ……so from my understanding I shoukld be able to cliam gst for about gst payable 590.91 and claimable is 2181.82 so the difference i could claim?
Hi Suresh, that’s mostly correct, but you must apply your logbook percentage to those figures. So 60% of the GST on the car you sold is payable, and 60% of the GST on the car you purchased is claimable. Also, you can only claim GST on the new car if you bought from a dealer. The GST amount may not be exactly 1/11th of the purchase price because some charges do not have GST, so please check your tax invoice for the GST amount. – Jess
Hi Jess,
If a motor vehicle using as a primary asset for generating income, the vehicle limit is not applicable for calculating depreciation and GST claim. Isn’t it ?
Hi Josh, that’s incorrect, the luxury car limit DOES apply for business assets for both GST and depreciation. This is indeed the point of the luxury car limit. The ATO are essentially saying that there are plenty of cars below that price that could perform the practical functions required for any business. So if someone chooses to buy a car costing more than this, they are probably doing so for personal enjoyment reasons, and they shouldn’t be allowed to have a tax deduction for that extra amount. I hope this answers your question! – Jess
Hi Jess,
I am privately selling my car, which I have used for ride share purpose for almost 3 years. I have never claimed any car depreciation. Do I need to pay tax on the selling price now? Second, do I need to notify CPV or any other government body about this?
Thanks in Advance.
Ash
Hi Ash, whenever you sell a car that has been used as a business asset you must declare that sale as taxable income, and if you are registered for GST you must pay GST on the sale price as well. I’m sorry I can’t advise on car registration matters or sale processes, you will need to find this out from your state’s road authority. – Jess
Hi Jess,
If I went to collect a new car interstate vs paying for freight, would the travel cost be deductible?
Thanks in advance
Hi Mike, the ATO would consider this part of the cost of acquisition of the car. This means you can’t claim an outright deduction, but instead it becomes part of the cost of the car itself, which is then dealt with under depreciation rules (i.e. small business depreciation or the instant asset write-off, depending on the cost of your car and your tax circumstances). – Jess
Hi Jess,
Many thanks for all of the information you have provided – It is very helpful. I just have one question:
– I plan to purchase a car for around $40K and will take a loan from my parents to do so. Can I claim the interest payments as a deduction (seeing as though I took it from my parents and not from the bank? If so, what records do I need to keep to prove the interest payments? Do I need to sign a contract or something with my parents?
Thanks
Fiz
Hi Fiz, the ATO will accept a tax deduction for a family loan as long as it is on ‘commercial terms’, which means the interest rate is fairly close to what you would get from a bank (a little bit lower is okay). You will need to be able to show bank records to prove that the payments and interest really were paid, and you will need to show a written, signed loan agreement. If your family want to charge you a very low interest rate then the ATO would consider this a ‘family arrangement’ and it wouldn’t be deductible. – Jess
Hi Jess
I read your article and I have few questions:
– ‘a logbook isn’t required for GST claims, instead the ATO allows you to make a reasonable estimate of your business use percentage’. How is it possible to justify that the estimate is ‘reasonable’ without use the logbook? What happen if the estimate will differ from the % business/private used in the Tax Return?
– Is it possible to claim the GST of an expense had few previous quarters?
– Buying a new car, is it enough that the Tax Invoice show just the name or the ABN code is important to claim the GST?
Thanks
Thank you
Hi Giuseppe, the ATO say that you need to be able to show them how you came to your reasonable estimate. So for example you might make note of your kilometres for a few weeks and use this information to form your estimate. If you then later keep a formal logbook that you use for your tax return then naturally the percentages will be different, the ATO understand this and it’s not a problem. It is not possible to claim GST on expenses you incurred before you registered for GST, and remember you are only eligible to register for GST once you formally start the Uber application process. Regarding the invoice for a new car, the ATO has specific requirements for purchases over $1,000 if you wish to claim GST. You can find them here. – Jess
Hello Jess,
Thanks for your meaningful insight into Uber Car and Tax-related information here. I have a quick query. I have a full-time job and will continue to work in it. Uber driving is going to be my secondary source of income. However, I recently bought a brand new vehicle for $27K driveaway price on 31 May 2019. It was bought through Novated lease. I pay the lease payments with a mix of pre-tax and post-tax payment from my fortnightly salary. My questions are:
1. Can I use the vehicle for UBER as I am confused about who owns the vehicle in the novated lease arrangement and what right do I have on the vehicle in regards to using in for UBER?
2. What is the tax implication or rather what tax benefits I can claim and NOT claim for using the car for both UBER and my day-time job?
Hi Bhuban, whether you are allowed to use a novated lease car for Uber depends on whether it is allowed in your lease contract. You should check the terms of your lease to see if this is allowed. From the ATO’s perspective it’s fine, and I believe Uber are fine too. Regarding tax deductions, you cannot claim the pre-tax portion of your lease payments, only the post-tax amount. And for other expenses you cannot claim anything that was salary packages, you can only claim for expenses you paid out of your post-tax pay. Note that the cents per km method cannot be used for a salary packaged vehicle, so you must keep a logbook if you wish to claim any deductions. – Jess
Hi Jess,
Great article. Have a question. I already have a primary job and a primary car. I’m thinking of doing some Uber Eats as a side job after work and on weekends for some extra cash. I don’t want to use my current car as it’s a big family SUV with high running costs. I’m thinking of buying a small cheap car specifically for UberEats.
If I use the new small car for Uber Eats, do I just need to maintain one logbook for the small car only. In that case, almost 100% of the running mileage and costs for the small car would be for Uber Eats. Can I operate this small car, maintain the logbook and submit the tax return for it independent of any personal travel on my primary car. In my tax return and deductions calculation, can I just consider this one car used for UberEats.
Hi Hassan, yes that’s exactly right. You just need to keep a logbook for your Uber vehicle. It’s fine that it’s 100%, because you will be able to show the ATO you have another car for your personal use. This will allow you to claim 100% of your Uber car’s running expenses. – Jess
Thank you Jess.
Hi Jess
Is there anything to prevent me from purchasing a car from my spouse (only held in her name, buying her a new car) at market rate (supported by red book price) and then using it for Uber and claiming depreciation?
Thanks
Steve
Hi Steve, you could, but only if you did it formally through your state’s road authority. If you did this you’d have to pay stamp duty and transfer fees, so it may not be worth it. Alternatively, you can claim expenses for a car in your spouses name as mentioned in the blog post above, but it will be based on her original purchase price depreciated up until the time you started using it for Uber. It’s up to you to decide whether you want to pay the costs associated in having her sell the car to you. – Jess
Dear Jess, Many thanks for your help. I posted the following comment here but did not go through. Could you please help me out with following question:
I have been driving my wife’s car for Uber until 15 June 2019 then bought a car from a dealer. I have been driving the new car afterwards by now but there is a problem here because 15 days of driving the new car are from 16th to 30th June. I paid ATO the GST of $452 for Q2 and $383 for Q3 and now I am about to pay GST of around $400 for Q4. But in Q4 I have a new TAX credit of $1497 that I paid the dealer when I purchased the car. If I include this new GST tax credit in Q4, there will be a negative credit (400-1497=1096). I don’t know how to reimburse the credit. Or could it be used for the Q1 of the new financial year?
cheers
Hi Razi, if your GST credits are more than your GST payable, then the ATO will send you a refund of the net difference on your BAS, deposited to your bank account. It’s just like a tax refund. – Jess
Hi Jess! Your article and your posts here are very helpful. Just wanted to clarify. I want to start driving with Uber and therefore want to buy a new car on loan for approx $15,000. Is it recommended I get a loan and pay off the car upfront, or purchase the car on finance? How much of this amount is tax deductible?
Appreciate your assistance with this!
HI Elizabeth, thanks for your comment. I think all of the information I can possibly give is in the article above! You asked whether to get a loan or buy on finance, but I think maybe these are both the same thing? If you mean loan vs lease it depends on your circumstances and I’m sorry I can’t give personal tax advice here. You might like to talk to a finance broker to run the numbers to compare the two options for you. – Jess
Hi Jes, I bought car worth $ 21000 for uber on Aug 2018 and I had registered for GST before hand. I started driving uber from Jan 2019 and my gross income for Q3 was $600. I am going to do BAS this quarter Q3.
How do I fill up in G1 , 1A, 1B in my situation for Q3. In Q2 I had filled up NIL to all. Any help will be much appreciated.
Hi Sursam, I’m sorry I can’t advise you how to complete the BAS here. We are an accounting firm, so preparation of a BAS is a service you would need to pay for. You can find more information on our BAS page. Otherwise you can find instructions on the ATO website. – Jess
Hi Jess thanks for the article, it’s is very informative. I have an additional question if that’s ok. My situation is as follows.
High income earner, +180k, looking to buy a new car and thought uber would be a good way to make the purchase at least partially deductible. Is the purchase price deductable or is it just depreciation that you get? This deduction, is it only against uber income or does uber income get added to salary/wage income and then deduction is against that figure, top bracket? I also have the option to salary sacrifice through my employer and trying to work out which is best but I know there are too many variables to give me a straight answer.
Thanks
Matt
Hi Matt, yes alot of variables here! But a few points I can make for you. Depreciation is essentially the purchase price spread over time. So if you were to claim depreciation and the purchase price, that would be double-dipping. The depreciation/purchase price is a deduction against your Uber income. Then your net Uber income after deductions will be taxed at your marginal tax rate. Or if you have an overall Uber loss, refer to the loss rules which are described under the instant asset write-off section above. I’m sorry I can’t advise on whether buying or salary packaging is better, but generally the salary packaging company will be able to generate a comparison calculation to help with your decision. – Jess
Hi Jess,
My last question. 🙂
I have confirmation from the ATO my ABN/GST registration is effective from 18 Jan 2019.
In January 2019 I bought a brand new car from a dealer for Uber and personal use.
I commenced Uber driving on 31 January 2019.
Please note I negotiated the car deal on 15 Jan 2019 and paid a $2,000 deposit.
Rego was paid on 18 January 2019 and the balance of the purchase ($70,000) was paid on 18 January 2019.
Because I paid the final monies on 18 January (which I have a receipt for) my read is I can claim the car costs for GST and tax purposes this fiscal?
I’m aware the car limit for 2018-19 is $57,581.
Your feedback will be appreciated.:)
Hi David, GST is calculated on a cash basis, which means that the GST credit occurs on the date you make the payment. This means that as long as you have evidence of the date you made the payment, and that it was made after you were registered for GST, then you can claim the GST credit. In your case you won’t be able to claim the GST on the deposit, but you can on the balance payment. As an alternative, if you have evidence that you started the Uber application process earlier than the 18th of Jan, you may like to consider contacting the ATO and changing the start date of your ABN and GST registration. You are eligible for an ABN and GST from the date you started the application process. I suggest searching your email inbox for the word Uber, and scroll back to see when you first started receiving emails about the registration process, this will show you the earliest date you can be registered from. – Jess
Hi Jess,
Wow! Thank you for clarifying the purchase date question but also the tip about from when I started the application process. Not concerned about the deposit because the car is over the $57,581 limit but I did pay insurance (which has GST in it) before 18 Jan so will def check my records or even email Uber to get the commencement date! 🙂
Whilst I feel comfortable doing my own upcoming first BAS, especially after your guiding tips, if I find anyone who wants an expert to do it for them I will definitely recommend you.
Thanks once again for your guidance and fantastic blog.
Hi Jess,
Thanks for the article. This is really helpful.
I bought a car for 25,500 excluding gst In August 2018. Can you confirm that I will be able to deduct the whole amount of the car in 2018-2019 financial year?
Hi Roy, as long as you have a valid logbook, yes you will, because the balance of your assets will be below $30,000 at the 30th of June 2019. – Jess
Hey Jess, Good afternoon
My question is a get new car on June 28 2018 l di used my car for private business, but in July 2019 started with Uber
Can claim any GST or any deduction ?
Thanks
Hi Michael, I’m sorry but no, you can’t claim any GST on the purchase of your car because you were not running an Uber business and registered for GST on the date you purchased the car. – Jess
Hi Jess,
You mentioned in the article that a person can use their salary packaged vehicle for Uber driving. Are you sure? This is exactly what I want to do, but didn’t think it was allowed from an insurance perspective.
Say I have an accident in a salary packaged vehicle (from my other employer) whilst undertaking an income-generating Uber venture, would I be covered?
What about being able to change a salary packaged vehicle insurance and registration to ‘business’? Please confirm. Thanks, that would be amazing if I could do that.
Hi Dom, I can only comment on what’s allowed from the ATO’s perspective, and the ATO pay no attention to whether your registration and insurance is business or private, it’s tax deductible either way. Your specific novated lease company or insurance company may or may not allow you to drive for Uber or cover you, you would have to check with them. I also can’t say what your state’s road authority requires regarding the registration, so you’ll need to check with them. Sorry I can’t help with these questions! – Jess
Hi Jess.. kenny here..I works with uber eats as a part timer.i am earning $60000 per year from my first job..so far I have earned $17000 from uber eats.. what’s the best scenario to minimise the tax.
I can’t use my car depreciation value for tax purposes because it has been 100% depreciated last tax year.
Here is possible income and expenses from uber
INCOME : $23000
EXPENSES (inclu rego,insurance,fuel,phone, maintenance) : $7000
What I would like to know is
Should I buy car to minimise the tax.. if so how much value of car has to be
Thanks
Hi Kenny, I’m sorry I cannot give personal tax advice here. The only information I can confirm for you is the information in this article above. – Jess
Hi Jess, thanks for providing such useful information in your article! I bought a new vehicle in Nov 2018 for $25,000 inc. GST & on roads however I didn’t register for GST or start driving for rideshare until Feb 2019. Is there any way I could claim still claim back the GST on the vehicle purchase price? I wasn’t aware you had to already be registered for GST before buying. Thanks in advance 🙂
Hi Luke, I’m afraid you’re out of luck, there is no way to get the GST back later. To claim the GST you must be registered for GST on the day of purchase, and you can’t register for GST until you are actively running a business (which in this case generally means you actively start Ubering). Sorry it’s not better news! – Jess
Hi Jess,
If I rent a car for uber work and use it for nothing else, will I be able to offset the whole rental cost as a tax deduction? Assuming I pay more tax per week than the rental cost.
Hi Scott, if you make an overall loss from Uber, you can only claim that loss against your other taxable income if your Gross Fares for the year were more than $20,000. If your Gross fares were under this amount, then you can’t claim the loss in your current year tax return. Instead those losses will be ‘carried forward’ and can be offset against profits in future years. To put it another way, if you earn less than $20,000 per year then you can never claim more than you earn. – Jess
Hi Jess, I will take possession of a car on the 27th Feb. I then need to get CTP upgraded and a vehicle inspection, then a Book Hire Service Licence from Qld TMR. Hopefully I will be driving before the end of March. Can I estimate use to claim the GST on the vehicle for the 3Q BAS even if, for some delay, I don’t begin driving before the end of March 2019? I’ll need to do a BAS regardless?
Secondly, I will use your services to do my BAS returns but is it necessary for a NIL BAS return? Do you make the GST claim separate to the BAS? As it’s my first BAS I’m not sure of the procedure. I read one of your posts saying to call the ATO but can’t see where on MyGov the document ID form could be found?
Hi Grant, a logbook is not required for a BAS, so it will be fine to estimate your Uber percentage. Depending on the timing of when you start driving, and if your BAS due date allows, you might like to wait and see how your first week or two of driving stack up to help you estimate the percentage for your Q3 BAS? But if not, your best estimate is acceptable. I do recommend doing a Nil BAS yourself, but from what you’ve described you’ll have a bunch of expenses in your Q3 BAS that you’ll be wanting to claim, so Q3 wouldn’t be a Nil BAS for you at all. A Nil BAS is only for if you had no income and no expenses to claim GST on. But for the sake of answering your question, in MyGov you need to go to Activity Statements and click on the particular BAS. The Document ID should be listed there towards the top, or you can just lodge the Nil BAS from that very screen, I believe as an option towards the bottom?. I hope this answers your questions. – Jess
Hi Jess,
My husband bought a car for $26,990 including GST. Unfortunately, he registered for GST after he bought the car. He took a loan of $27,516 including bank fees which will be amortized for 5 yrs. If he cannot claim input tax for GST, can he just add it into the cost of the car and claim depreciation instead? What will be the treatment for the bank fees which was capitalized into the loan?
Hi Gie, that’s right, if he wasn’t registered for GST at the time of purchasing the car then the whole $26,990 will be depreciated. For the loan borrowing costs these are claimed equally over five years or the life of the loan, whichever is shorter (apportion for days in the first and last year). – Jess
Hi Jess,
Simply put; if I buy a car for $10,000 and use it only for Uber, how much can I get back on tax for it?
Hi Shelby, the amount you get back will be $10,000 x logbook percentage x marginal tax rate. If you the car only for Uber and keep a valid logbook to prove it, then this will be $10,000 x 100% x your marginal tax rate. Your marginal tax rate depends on how much you earn from Uber and from all other sources. No simple answers when it comes to tax! – Jess
Hi Jess
Thanks so much for this very informative post. May I ask you a few questions here?
I am currently using my own car for rideshare and most likely I will keep using this car for rideshare until I buy a new car in FY19 Q4. So this means I will keep using my current car for rideshare in 3 out of 4 quarters in FY19 (from July 2018 to March 2019) and may start using a new car from FY19 Q4. I am going to buy a car under $20K for instant write off within FY19.
So I was assuming that I will have to claim two car’s depreciation when doing tax return for FY19.
1. Old car – can I claim the depreciation for thw whole year, or maybe 75% of whole year depreciation given I used it in 3 out 4 quarters？
2. New car – I was assuming I can do instant write off. However, for cash flow consideration, I am going to apply a car loan with principal plus interest, will this have any impacts on instant asset write off?
3. I kept a logbook for I started driving with Uber in last year. I understood it could be used for 5 years.Can I apply the busienss portion rate of this logbook to my new car? What if the business portion for my new car will be higher? Because previous I only had one car so have to use it for some private trips but now I will mainly use the new car for rideshare only.
I look forward to hearing from you soon
Many thanks
Hi Leslie,
1) This depends on what kind of depreciation you use. With traditional depreciation you must apportion by number of days, or with the small business depreciation method it is just a flat rate for the whole year. You can read more here.
2) Taking our a loan or finance does not impact the instant asset write-off.
3) You can continue to use the same logbook when you change cars, or you choose to start a new one if your percentage of usage will increase
I hope this answers you questions! – Jess
Hi Jess,
Somehow I didn’t receive the email notification for your reply so I just looked it again and found your answer.
You really helped me a lot.
Thank you so much!
Leslie
Hello
If i buy a used car today for $7k and write it off upfront and use it 100% for business. what happens if i sell or stop using the car this financial yr or next and convert it to personal use?
Thanks in advance
Hi Adam, if you can claimed 100% write-off and then sell the car then you must pay income tax on the sale price x your logbook percentage. The same is true if you stop using the car for business purposes, you will pay income tax on the marker value of the car x the logbook percentage. – Jess
Thank you very much Jess!
Hi Jess,
I would like to check if I buy a car under private use and started driving Uber, can I still claim the small business depreciation?
Thank you.
Kind regards,
Eden
Hi Eden, yes absolutely. We would need to first calculate how much the car depreciated before you started using it for business purposes using the standard rate of 25% apportioned by days. This will determine the opening value to use for the small business depreciation once you start driving for Uber. – Jess
Hi Jess,
Thanks for the explanation. Could you explain more on how to calculate the 25% apportioned by days? For example if I did not drive Uber for 100days since I bought the car, does it mean (0.25*100)*the cost of the car? Thank you.
Hi Eden, that’s .25 x 100/365 x the cost of the car. I’m sorry I can’t go into more detail here as it’s hard to explain, but actually it sounds like you have the gist of it! – Jess
Hi Jess,
Thank you for this informative articles, me and my husband is doing Uber, we are planning that we buy a car that we will both use for Uber (shifting). Can we both claim GST % if we have both our names in the invoice? Your reply is greatly appreciated. – Diane
HI Diana, yes that’s no problem. Just note that when you keep your logbook you will need to keep track of each of your separate kms within the one logbook (it cannot be two separate logbooks). At the end of the 12 weeks you’ll be able to calculate the car’s percentage as x% your use + x% his use + x% combined private use = 100%. Then you can each claim your respective shares of the expenses in each of your tax returns. – Jess
Hi Jess,
I am working full time and drive under on part time basis .
I am looking to buy car so can you please suggest what is the best way to do and can able to claim the most of it.
Thanks
Nav
Hi Nav, everything I could write to answer your question is already written above in the bog post. I this explains what you need. – Jess
Hi Jess,
Assuming a car for Uber round $12000 and working 10-16 weekend driving. Which way is most beneficial way to acquire a car to claim deductions on a car? Cash, car loan or lease payments? Are lease payments fully deductables like loan interest?
Thanks for your help.
Hi Paul, I con’t answer this question for you because it depends on many personal factors, including your own cash flow requirements, how long you expect to drive for, the cost of the car, your marginal tax rate, how much you’ll earn and a number of other factors. Purely from a direct tax perspective, buying a car (with or without a loan) gives you more of an up front deduction, while with renting or leasing the deductions are spread evenly over the term of the lease. Yes lease payments are deductible, but you must have a logbook. – Jess
hi Jess
I have a question on GST and vehicle depreciation
I purchased a vehicle in November 2016 for $98,000 inc gst and other tax (LCT).
In April 2018 I started doing Uber with this car and decided that this car will be 100% for uber business. (as I have another car for personal use)
question 1. Can I claim any GST in my Jun18 BAS? I think I cannot claim any GST
Question 2 how do I depreciate my vehicle?
below is my understand
maximum depreciation car value – $57581
Opening Bal Year Start Day End Day NO. of Days Rate amount comments
$57,581.00 1 28/11/2016 28/11/2017 365 15% $8,637.15 Cant Claim as not used for business
$48,943.85 2 28/11/2017 25/04/2018 148 30% $5,953.72 Cant Claim as not used for business
$42,990.13 2 26/04/2018 30/06/2018 65 30% $2,296.73 Dep claim for FY17-18
$40,693.40 3 01/07/2018 30/06/2019 364 30% $12,174.57 Dep claim for FY18-19
$28,518.83 4 01/07/2019 30/06/2020 365 30% $8,555.65 Dep claim for FY19-20
$19,963.18 5 01/07/2020 30/06/2021 $19,963.18 Dep claim for FY20-21
please provide your advise
thanks
mobeen
Hi Mobeen, you are correct that you can’t claim GST on the purchase of your car as you weren’t registered on the day you bought it. To calculate the depreciation on your car you must first use the regular depreciation rate of 25% diminishing value apportioned by days up until the date you started driving for Uber. This will give your opening value. Then you can use small business depreciation rates from that point onwards, so that’s 15% DV up to the June 18 (you don’t have to apportion for days with small business depreciation, you just claim the whole 15%, and then 30% each year after that. – Jess
Hi Jess
Thanks for the advice
Hi Jess,
Thanks very much for the great advice and could you explain more about how the small business depreciation schedule works. For how many years can you claim depreciation on a car and what are the percentage rates. Thanks Sally
HI Sally, all businesses with turnover below $2 million are eligible. You can claim 15% of the GST-exclusive cost in the first year (regardless of when during that year you bought it), and 30% of the written down value every year after that. There is no set time period, this continues indefinitely and the value will get smaller over time. Once the balance of all your assets reaches $20,000 you can write of the remaining balance at once. There are also particular rules when you sell the vehicle. You can read more on the ATO website here. – Jess
Hi Jess,
I have inquiry in regards to the timing of a new car purchase. If I buy a car from a dealer on say the 18th of June so I only have the car for two weeks of the financial year and drive it for two weeks only for Uber and no private use. Does that mean I can claim 100% of the GST paid on the purchase in the current quarter for the BAS. Also can I claim 15% depreciation on the cost of the car on my tax return for the financial year. Thanks Sally
Hi Sally, yes you can claim the whole GST in your June BAS, and also 15% depreciation in your 2018 tax return. The small business depreciation rules are very advantageous when you buy a car right before the end of the year! Remember for depreciation you will need a 12 week logbook that starts before the 30th of June, so you will have to wait until the 12 weeks are complete before you can lodge your tax return. This isn’t required for your BAS, the ATO allows you to make a reasonable estimate of your Uber usage instead so the logbook isn’t required, it’s only the tax return you’ll need to wait for. – Jess
Hi Jess,
Many thanks for the nice and clear explanation. I think DriveTax is a great place for the rideshare drivers! Good luck!
Very kind feedback Mahmudul, thankyou! – Jess
Hi Jess, this is an informative article for the Uber drivers. However, what rule applies for the following situation?
A person bought a car on finance:
Purchase price (say) 15k
He paid an initial amount of $1000
Took loan on the remaining amount i.e. 14k
Can he claim the gst of $1000 in BAS and the instant deduction of 900 (1000-gst)? I assume he can also claim the interest and bank charge for the remaining loan amount. What will be the depreciation schedule for this situation?
Thanks a lot!
Hi Mahmudul, (I’ll assume when you say finance you mean a loan with principal and interest). Regardless of how much you borrow, you still claim a deduction/depreciation and GST for the whole price of the car. How much you pay deposit/cash and how much is borrowed doesn’t matter, you still bought a whole car, so you can claim it all (subject to your logbook of course). So in your example $15k would still be the purchase price to claim for GST and the instant write-off, even though $1k was cash and $14k was loan. Then you would claim a tax deduction for any interest paid on the $14k loan. Remember there is no depreciation if you claim the write-off, it’s one or the other. – Jess
Hi Jess
Thank you for your information on buying and/or selling a car for Uber. It has cleared up several points for me.
Much appreciated.
Thankyou for the great feedback Jose! – Jess