Free Uber Bookkeeping Spreadsheet
Free Uber Bookkeeping Spreadsheet
Free Uber Bookkeeping Spreadsheet

 

How Much Will I ACTUALLY Make From Uber Driving?

how much will i actually make from uberIf you’re thinking about driving for Uber, it can be hard to figure out how much money you’ll actually make. Gross fees per hour vary, and after Uber’s fees, ATO taxes and car expenses, will there ultimately be enough left to be worth your time? In this article we will break down how much Uber drivers earn on average, and help you estimate how much of your Uber earnings will actually end up in your pocket.

 

How Much Do Uber Drivers Make?

This is the most difficult part of the equation because it’s different for every driver. Average fares per hour can vary dramatically depending on a number of factors:

  • Where you live – in particular whether you have trips coming through as soon as you leave home or you need to travel to a busier suburb first, which takes time out of your Uber shift.
  • Where you drive – inner city areas tend to provide shorter trips, while further out you may end up with longer journeys and airport trips. Generally you won’t have a great deal of control over this. Where your trips take you in any given driving session is largely up to chance.
  • Timing of your Uber shifts – whether you drive weekdays versus weekends, and day versus night will dramatically impact your earnings. Early in the morning airport trips will be common, and late at night you’ll have riders travelling from the the inner city home to the suburbs. If you have the flexibility to choose when you drive you should experiment and keep records of your earnings to find the most profitable times and days to drive in your area.
  • Surge pricing – if you have the ability to take advantage of surge periods you’ll see an increase in your hourly earnings. Some drivers are able to keep an eye on their app from home and jump in the car anytime they see surge pricing. In some areas Uber also allow you to request trips heading towards a surge area once or twice per day. These are just a few strategies that can boost your earnings.
  • Events – Driving for events can be especially profitable and surge pricing is common. So if you’re available to drive for sporting matches and other cultural events in your city your average earnings will be higher. It can pay to save a ‘what’s on in your city’ website in your internet favourites, and also keep a copy of the football fixture handy when planning your driving sessions.
  • Other drivers – the number of drivers on the road will always counteract these factors. Some times are more popular to drive as more drivers are available, particularly outside of business/university hours, and so there will be fewer trips per driver. Some drivers have also commented that when Uber run promotions to recruit new drivers or encourage lapsed drivers back on the road they’ll see a drop in their earnings.

 

As you can see, with so many variables it’s hard to estimate how much you will earn driving for Uber. Your best source of information is the various Uber drivers’ online forums, where you can connect with drivers from your local area to find out the average earnings from driving for Uber at various times of day and night. A great place to start is UberPeople, but also try googling for other Uber networks and meetups in your city.

 

Average Profits for Uber Drivers

We’ve collated data from lodging hundreds of Uber driver’s BAS’s and tax returns to calculate how much Uber drivers make on average in Australia. The charts below give a rough guide to how much of your Uber gross fares will actually end up in your pocket, depending on your marginal tax rate.

Profits from Uber Driving - Below Tax Free Threshold
Profits from Uber Driving - 21% Marginal Tax Rate
Profits from Uber Driving - 34.5% Marginal Tax Rate

As you can see, the average profit from driving for Uber depends largely on your marginal tax rate. Your marginal tax rate is based on how much you make from employment and any other sources during the financial year. You can look up your marginal tax rate on the ATO website to see which of the charts above apply to you. (Note that in our charts we have added in the Medicare Levy of 2%)

So how do we interpret these charts? Here are two ways to look at them:

Average Hourly Earnings for Uber Drivers After Tax

To work out your average hourly rate after tax from driving Uber, take your gross fares per hour and multiply by the percentage of profits in the chart that applies to you.

  • If you’re below the tax-free threshold then multiply your gross fares per hour by 26% to give your take-home pay per hour after tax.
  • If you’re in the 21% tax bracket, multiply your gross fares per hour by 19% to give your hourly take home salary after tax.
  • If you’re in the 34.5% tax bracket, multiple your gross fares per hour by 15% to show how much you’ll earn per hour after tax driving for Uber.

How Much of Your Uber Earnings Actually End Up In Your Pocket?

Another way to read these charts is to say that for every $100 of gross fares, the profit segment of the chart tells you how many dollars you’ll actually take home.

  • If you’re below the tax-free threshold then for every $100 of gross fares you’ll take home $26.
  • If you’re in the 21% tax bracket then for every $100 of gross fares you’ll take home $19.
  • If you’re in the 34.5% tax bracket then for every $100 of gross fares you’ll take home $15.

Of course these charts are based on the results of other drivers, and your own figures, in particular your car running costs, may be different. So please use these percentages as a guide only.

 

Average Expenses for Uber Drivers

Here we’ll break down the other expense sections of the charts in a little more detail.

Uber’s Service Fees

From your gross fares Uber will deduct 27.5% for their service fee. 2.5% of this is GST, which you can claim back on your BAS at the end of each quarter, so the net cost to you is only 25%.  You can read more about this in our blog post on calculating GST on Uber fares and fees.

Car Running Costs

Motor Vehicle Expenses Deductions for Uber Drivers

Car running costs for Uber drivers vary from driver to driver. They depend on things like fuel efficiency, insurance costs in your area, how expensive repairs and servicing are for your model of car, and whether you own your car, have a loan, or you rent or lease.  Claimable car expenses usually equate to roughly 33% of gross earnings (before deducting Uber’s fees).

It’s important to note that some of these expenses are what we call ‘sunk costs’. This means that you would be paying these expenses regardless of whether you drive for Uber or not, so they shouldn’t be taken into account when evaluating how much money you’ll make from Uber driving. For example the interest on your car loan is payable regardless of how much or little you drive for Uber, so it’s a sunk cost.  Most of your insurance and car registration fees will be sunk costs too, you should only take into account any additional costs over and above your regular private use policy. The 33% figure mentioned above is based on tax-deductible expenses, so it doesn’t consider sunk costs. This means your profit from driving for Uber will in reality be a little higher than what is shown in our figures.

For more information on claiming your car running costs, including the rules and requirements for keeping a logbook, check out our post on Tax Deductions for Uber Drivers.

Other Expenses for Uber Drivers

Uber drivers typically also claim deductions for their mobile phone, tolls, water and mints provided to riders, accessories for their cars (dash cams, seat covers etc), phone chargers and cables, medical checks, accounting fees, stationery and computer expenses.  On average these costs account for another 7% of your gross earnings. Our post on Tax Deductions for Uber Drivers explains more.

GST for Uber Drivers

Yes, Uber Drivers do have to pay GST on their income, even if they earn less than $75,000. The GST on Uber income is easy to calculate, it will be 1/11th of your gross fares. You can then reduce this GST payable by claiming back the GST on your car and other expenses. Again, this varies from driver to driver. On average, after claiming expenses your GST bill will be around 7% of your gross fares. Our article on GST on Uber Fares & GST on Uber Fees explains more about how this is calculated.

Income Tax Rates for Uber Drivers

Income tax is the most difficult cost to calculate because it depends on your marginal tax rate. As we mentioned above your marginal tax rate is based on how much you make from employment and any other sources during the financial year. You can look up your marginal tax rate on the Tax Office website to see which of the charts above apply to you.

Here are some examples on how to calculate Income Tax for Uber Drivers:

  • If Uber is your only source of income and your Uber profits are under $18,200 then you’ll be under the tax-free threshold and your profits will be entirely tax-free. You should refer to the first chart above.
  • If you have employment income of $25,000 and drive Uber part time as well, then the marginal tax rate on your Uber income will be 21%. This means the second chart applies to you, so on average 6% of your gross Uber earnings will go to Income Tax
  • If your employment is $50,000, then your Uber income will fall into the 34.5% tax bracket, so you should refer to the third chart. Roughly 10% of your gross Uber earnings will go to Income Tax
  • If your Uber income straddles two marginal tax rates, the easiest solution is to assume your tax rate will be roughly halfway between the two relevant charts.

 

So Is Uber Driving Really Worth It?

That depends entirely on you. If the hourly rate you’ve calculated weighs up for you as a worthwhile use of your time, then yes, absolutely.

One of the most appealing aspects of driving for Uber is the flexibility to work on your own schedule, as often or as little as you like. I have clients who are single parents and drive during school hours. They can attend school events whenever they like, and stay home when a child is sick without worrying about job security. I also look after a great number of students who fit Uber in around their classes and study schedule. And many drivers don’t drive regularly, instead just jumping on the road when their family needs a top-up of cash for a holiday, unexpected bill, or Christmas presents for the kids.  What other job offers that kind of flexibility?

The trade-off of course is that take-home pay tends to be lower than an employee job, with some drivers earning below minimum wage. The 7:30 Report recently ran a segment exploring this issue, you can watch it here. The segment features economist Jim Stanford who also published a detailed report on the topic.

Ultimately, the question you need to ask yourself as a prospective Uber driver is whether the trade-off between lower wages versus complete flexibility is worthwhile for you.

 

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. 

Free Uber Bookkeeping SpreadsheetUber Bookkeeping Spreadsheet

Jess Murray CPA Uber 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.

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