How Is GST On Uber Income Calculated?
One of the most common questions I hear about tax for Uber drivers is how to calculate GST on Uber Income. There are a bunch of different components on your Uber income summaries, and the ATO requires us to declare them all separately. This means you need to calculate your GST on Uber Fares and GST on Uber Fees separately. Sounds messy, right?
And where do Uber themselves fit into all of this, are you paying GST on Uber’s income?
In this article I’ll explain exactly how it all works, and how the ATO calculates GST on your Uber Income.
Uber structure their contracts and service agreements so that for every ride there are two separate transactions:
- You provide a ride to a rider
- The rider pays you for the ride
- Even though the money is collected by Uber on your behalf, it is still YOUR business income
Uber Service Fee
- Uber provide an app and payment system
- You pay a fee to Uber to use this
- This is a business expense to you
Of course from your perspective this is all one transaction. Uber make things more convenient for everyone by collecting the fare from the rider on your behalf, deducting their fee automatically, and depositing the net difference into your bank account. But legally, and in the eyes of the ATO, two separate transactions occurred, and this is how it must be declared in your BAS and Tax Return.
Let’s look at these transactions and their GST implications in more detail.
GST on Uber Fares
The first transaction is the Fare. This is a transaction directly between you and your rider. It includes all amounts paid by the rider, such as Split Fare Fees, Airport Fees, City Fees and Booking Fees. Even though you pass the Split Fare Fees, City Fees and Booking Fees on to Uber, you still have to declare two separate transactions. You declare the amounts received from the rider as income, and then claim the payment to Uber as a deduction to cancel out the income.
Your income also includes Miscellaneous Payments from Uber, for example referral fees for referring another driver.
Under Australian tax law, Uber drivers are required to be registered for GST. As a GST-registered business owner, you are required to pay 1/11th of your gross income to the ATO as GST. This means you must pay GST on all amounts you receive from your passenger or from Uber.
Here’s an example:
- Gross Fare – $110.00
- Airport Fee – $4.40
- Booking Fee – $2.20
- Referral Payment – $33.00
Total Income = $149.60
GST on Income:
- GST on Gross Fare – $10.00
- GST on Airport Fee – $0.40
- GST on Booking Fee – $0.20
- GST on Referral Payment – $3.00
Total GST Payable = $13.60
GST on Uber Service Fees
If you read the Uber Service Agreement (see point 2) you’ll see the following (edited for clarity):
The Services (provided by Uber) constitute a technology platform that enables users of Uber’s mobile applications or websites … to arrange and schedule transportation and/or logistics services with … independent third party transportation providers…. You acknowledge that Uber does not provide transportation or logistics services or function as a transportation carrier…
Essentially this means that Uber is just an app/service used by your business. Uber connect you with riders, set the price and collect payment on your behalf, and in exchange they charge you a fee, usually 27.5%. This fee is an expense to your business which you can claim GST and claim a tax deduction for, just like you claim for your fuel or phone bill.
Changes from 1 December 2017
Prior to 1 December 2017, Uber traded through a foreign company. Since they were not an Australian company, they were not registered for GST. This meant they did not charge you GST on their 25% service fee, which in turn meant there was no GST for you to claim back as you didn’t pay any in the first place.
Effective from 1 December 2017 Uber changed to an Australian GST-registered company. This means they now charge GST on top of their 25% service fee (i.e. they charge 27.5%). You can then claim this GST back on your BAS. So from your perspective there is no difference to your out of pocket cost, your net fee after claiming back the GST is still 25%, just as before.
GST on Other Uber Fees
You will also pay to Uber any Split Fare Fees, City Fees (if they apply in your city) and Booking Fees you collected from your rider on Uber’s behalf (they deduct these automatically). You can claim the GST back on these too, just like the Service Fees. As mentioned before, even though they cancel out to zero, we have to declare both sides of this transaction separately, the fee you receive from the rider as income and the payment back to Uber as an expense.
Depending on where you live, you may incur Tolls or Airport Fees as part of giving a ride, which are of course a deductible expense. Uber automatically charges your rider a fee to compensate you, which is income to you (as mentioned above). So again the income and expense cancel each other out, but they still have to be reported separately.
Here is an example of the GST on the various fees and expenses, continued from our example above:
- Uber Service Fee (paid to Uber) – $30.25
- Airport Fee (you paid at the airport) – $4.40
- Booking Fee (paid to Uber) – $2.20
Total Expenses = $36.85
GST on Expenses:
- GST on Uber Service Fee – $2.75
- GST on Airport Fee – $0.40
- GST on Booking Fee – $0.20
Total GST Claimable = $3.35
GST Calculation Summary
Let’s put the above figures together to calculate the Net GST bill for our example:
- Total Income = $149.60 / 11 = $13.60
- Total Expenses = $36.85 / 11 = $3.35
Net GST Payable = $13.60 – $3.35 = $10.25
Of course you can then also claim the GST on any other business expenses, such as fuel, mobile phone and mints, to reduce your GST bill further.
GST is complicated at the best of times, and GST on Uber income is especially difficult to explain in just one blog post. If you’d like to gain a deeper understanding of the GST and tax laws surrounding your Uber income, you may be interested in our Understanding Uber Taxes online course. Through a series of 30+ video lessons and tutorials, you’ll learn exactly how the ATO’s GST and tax laws apply to your Uber income, a deep dive into the tax deductions you can claim, how to lodge your own BAS’s and tax return and much more. Visit our course information page to find out more.
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.