Seven Steps To Sorting Your Uber & Rideshare Tax Obligations

So you’re thinking of becoming a rideshare driver. It’s a great way to earn extra money on your own terms. But driving for Uber, GoCatch and their kind does come with some complicated tax obligations. If you’ve never had an ABN or run your own business before it can be daunting.

DriveTax are the leading authority on tax for Uber and rideshare drivers in Australia, and we’ve crafted the ultimate guide to handling your tax obligations with Uber.

 

Seven Steps to Managing Tax for Rideshare Drivers

  1. Get an ABN
  2. Register for GST
  3. Keep records of your expenses (don’t worry about income, you’ll be able to download reports for that)
  4. Keep a logbook, essential if you want to claim tax deductions for your car
  5. Put aside some of your earnings to save for your GST and Income Tax bills
  6. Lodge BAS’s quarterly to pay GST
  7. Declare your rideshare income on your end of year tax return to pay Income Tax

Lets look at these in a bit more detail.

 

Steering Wheel

 

1) Apply for an ABN, and 2) Register for GST.

First things first. All rideshare drivers must register for GST.

This is because the ATO have special GST rules for taxi drivers, whereby the usual $75,000 GST registration threshold doesn’t apply. They’ve determined that Uber drivers, and by extension all rideshare drivers, meet their definition of a taxi driver, being someone who drives passengers from A to B for money. This means that all rideshare drivers in Australia must register for and pay GST from the first dollar they earn, even if they only drive occasionally.

The process of getting registered is fairly straightforward. You’ll first need to apply for an ABN, and then register for GST. You can do this yourself on the ATO website, or we can take care of it all for you.

 

The DriveTax FREE Startup Pack for Rideshare Drivers

Our Startup Pack gives you everything you need start driving with confidence that your taxes are under control.

What do you get?

  • Your ABN application and GST registration taken care of by a CPA Accountant and Registered Tax Agent
  • FREE eBook – Seven Steps to Sorting your Rideshare Tax Obligations
  • FREE eBook – Complete Guide to GST for Uber & Rideshare Drivers
  • FREE Bookkeeping Spreadsheet for Rideshare Drivers

It only takes 10 minutes. Here’s how it works:

  • Fill in your details on our website (you’ll need your TFN handy, and your ABN if you’ve ever had one before)
  • Nominate your start date, answer a few quick questions about your driving, and you’re done.
  • We’ll apply to the ATO for your ABN and register you for GST
  • You’ll receive your ATO confirmations plus your Startup Pack via email within 2 business days.

*ABN’s are issued immediately about 90% of the time. Occasionally the ATO decide to review an application manually, and will post your ABN in the mail instead. However you don’t need to wait, you can still start driving right away.

Don’t have your ABN and GST Registration sorted yet?

Get your free Startup Pack for Rideshare Drivers now.

 

Many drivers have asked ‘What if I don’t register, how will the ATO know?’ It’s now clear the ATO have access to information about who is driving for Uber, unregistered drivers have been receiving ATO letters demanding they register immediately and pay the required tax. No doubt they’ll be able to access the same information for other rideshare drivers too. If you’re not registered for GST and paying tax, you can expect to hear from them.

One last point, if you already have an ABN, you must use that same ABN for your ridesharing. If you’ve had an ABN in the past, it must be reactivated. This is because each person only ever gets one ABN which is used for all their business activities throughout their lifetime. The bad news is that if you’re currently earning business income from other sources you will have to charge GST and pay GST on ALL of your business income, not just your rideshare income, even if you earn less than $75,000. If you need more information on this, please contact us.

 

3) Keep Records of your Expenses

The best way to maximise your tax deductions and minimise tax is to keep good records. You can use whatever system works best for you, whether it’s software, a spreadsheet or a shoebox.

For fuel receipts, try keeping an envelope in your glovebox. You must collect all your fuel receipts, both business and private. Technically, for expenses under $82.50 you don’t need tax invoices and your bank statements are acceptable; tax invoices are only required for expenses over $82.50. However we recommend keeping all your receipts anyway to make them easier to add up and make sure you don’t miss any deductions.

You’ll also need to collect your receipts for insurance, registration, repairs, servicing, cleaning, tolls, mobile phone bills, rider amenities (water, mints etc) and anything else that relates to your driving. At the end of each quarter, (30 Sept, 31 Dec, 31 Mar, 30 June) bundle everything up, and start a new envelope/shoebox/spreadsheet. This will make completing your BAS simple.

Whether or not to keep a spreadsheet is a personal choice, it’s not essential. Some drivers prefer to keep ongoing spreadsheet records so they can analyse their profits, others are happy to sit down once per quarter with their bundle of receipts and a calculator. Whichever approach works for you is fine! 

For your income, there’s no need to keep records. Instead you’ll be able to download reports showing your income from your online account. The same goes for the fees you pay them. You’ll just download reports each quarter showing your income for your BAS, and another report for your tax return at the end of the financial year.

Note that timing of expenses is important. GST credits are based on the date you pay the expense. This means that if you pay your registration or insurance yearly, you will claim the whole GST credit in the quarter you make the payment, and nothing in the other three quarters. Be sure to file your expenses in the correct quarter.

 

4) Keep a Logbook

For GST purposes a logbook isn’t required. You can make a reasonable estimate of the percentage you use your car for business, based on your rideshare company’s online reports and data, car service records and other information. You can then claim this percentage of the GST back on all your vehicle expenses.

End of year tax is a different story. To claim a tax deduction for your car’s actual running costs, you must keep an ATO compliant logbook:

  • It must go for 12 continuous weeks. If you start driving less than 12 weeks before the end of the financial year you can continue the logbook into the next financial year as long as you start before 30 June.
  • You must record the date and the odometer reading at the start and end of the 12 weeks
  • For every rideshare session, you must record the date, and your beginning and ending odometer readings.
  • You can include your travel from home to your first passenger, from your last passenger back home, and the kms in between passengers too. (This is different to the usual employee rules, when you’re self-employed the journey to and from home is tax deductible too).  This means you just need to record your odometer once when you leave home and once when you arrive home, no need to record individual trips.

You can buy an ATO compliant logbooks from Officeworks, or from most newsagents. Our favourite is the Zions Pocket Vehicle Logbook (look for the yellow cover).

If you don’t keep a logbook, you cannot claim any of your car expenses on your tax return. Instead you’ll be limited to using the cents per kilometre method. This gives you a maximum of 5,000kms x 66 cents per km, equalling a maximum deduction of $3,300. If you only drive occasionally, and you feel this covers your car expenses, then feel free to skip the hassle of a logbook and choose this method instead. But if you drive regularly, this deduction could be much less than your actual expenses, and could leave you with a larger tax bill. A logbook is a pain, but it will ensure you’ll get the maximum deduction you’re entitled to.

 

5) Put Aside Part of Your Income to Save for Your Tax Bills

There are two types of tax you must save for and pay, GST and Income Tax.

Each time you get paid, you’ll need to put away a percentage of what you earn, so by the end of the quarter you’ll have enough money to pay your GST, and by the end of the year you’ll also have enough to pay your income tax bill. We recommend setting up a savings account especially for your rideshare tax bills, preferably one that will earn you some interest along the way.

We’ll explain these two types of tax in more detail shortly, but for now, here’s a rough guide to how much you should put aside:

GST – put aside 8%-10% of your rideshare income received  (i.e. the amount you receive into your bank account from your rideshare company after they deduct their fees)

+

Income Tax

  • If your Net Rideshare Profit plus any other taxable income will be less than $20,000 for the financial year, then you probably won’t have any tax to pay on your rideshare income received.
  • If your Net Rideshare Profit plus any other taxable income will be between $20,000 and $40,000, put aside 12%-15% of your rideshare income received.
  • If your Net Rideshare Profit plus any other taxable income will be between $40,000 and $80,000, put aside 18%-20% of your rideshare income received.
  • If your Net Rideshare Profit plus any other taxable income will be over $80,000, put aside at least 25% of your rideshare income received.

Note that these are very rough rules of thumb, based on the average figures of drivers we’ve worked with. They may not cover your whole tax bill, or they may turn out to be too much. Everyone drives different hours, has different cars and car running costs, and has different tax circumstances, and every company charges different fees, so please take these percentages as a guide only.

 

6) Pay GST Quarterly on your Business Activity Statement

Your Business Activity Statement (BAS), is where you’ll report your quarterly rideshare income and expenses to the ATO, and pay GST.

The ATO may send your BAS by post or electronically. Occasionally, if it’s your first quarter of driving, they may not send it at all. If you don’t receive yours, contact the ATO.

Here are the BAS quarters and due dates:

QuarterSelf-Lodgment – Paper FormSelf-Lodgment – ElectronicTax Agent Lodgment
1 July – 30 September28 October11 November25 November
1 October – 31 December28 February14 March28 February
1 January – 31 March28 April12 May25 May
1 April – 30 June28 July11 August25 August

 

Here’s how your GST bill is calculated:

  • GST on Income = Gross Fares (i.e. fares received from riders before deducting your rideshare company’s fees) / 11
  • GST on Expenses = Expenses X your logbook or business use percentage (where relevant) / 11
  • GST Payable = GST on Income – GST on Expenses

If you’d like for information on what kinds of expenses you can claim as an rideshare driver, check out our article on Tax Deductions for Rideshare Drivers.

 

Need help lodging your BAS?

Skip dealing with the ATO. DriveTax can prepare and lodge your quarterly BAS for you.

Express BAS – $99

  • Enter your income and expenses into our simple online form
  • At the end of the form we’ll ask for your payment details. We can accept credit card and PayPal
  • We’ll process your BAS within two business days
  • We’ll review your figures. If there are any queries or suggested extra deductions Jess will be in touch via email
  • Once complete we’ll lodge your BAS with the ATO and send a copy for your records
  • Simple, fast and great value

BAS Consultation – $180

  • Phone or Skype appointment with Jess Murray CPA
  • We’ll review your income and expenses and prepare your BAS live on the spot
  • There will also be time to answer any other tax questions you have
  • Once complete we’ll lodge your BAS with the ATO and send a copy for your records
  • If you’d like to lodge your own BAS’s in future, book a Consultation as a BAS training session
  • Personal BAS service plus all your tax questions answered

Have your BAS lodged by a Rideshare and Uber Tax Expert

Visit our BAS Services page now.

 

 

7) Pay Income Tax on your End of Year Tax Return

To pay income tax, there’s an extra business schedule within your usual end of financial year tax return where you’ll declare your rideshare income and expenses.

The income side of things is simple, as your rideshare company should send you an annual summary of your income and fees paid, or make one available to download.

To claim expenses, you’ll need to provide your accountant with your car running costs and your logbook, plus a summary of other expenses you incurred.

The amount of tax you’ll pay is calculated as follows:

  • Income = Gross Fares (i.e. fares received from passengers before deducting rideshare fees) excluding GST (i.e. Gross Fares divided by 1.1)
  • Expenses = All expenses excluding GST (where applicable), adjusted for your business use percentage (where relevant)
  • Taxable Profit = Income – Expenses
  • Tax Payable = Taxable Profit x your marginal tax rate

This tax payable will then be added in with your tax refund/tax payable from other sources (employment, investments etc) to work out your final tax position.

We can help prepare and lodge your rideshare tax return. As specialists in tax for Uber and rideshare Drivers, we know what you’re entitled to claim to maximise your deductions. But that’s not all we do. As a CPA firm and Registered Tax Agents, we offer the full spectrum of tax and accounting services. If you have a rental property, capital gains or any other tax complexities, we have the expertise and experience to help with those too. You can read more about our services, view pricing, and browse our appointment booking calendar for a timeslot that suits you by visiting our website.

 

Tax Returns for Uber Drivers and Rideshare Drivers

All DriveTax returns are prepared by CPA accountant Jess Murray, rideshare and Uber tax expert

Express Tax – from $170

  • Our simple online form collects your driving income and expenses
  • We’ll also gather your employment income and deductions, investments, rental properties and any other income
  • We’ll process your tax within ten business days July-Oct, or five business days the rest of the year
  • If there are any queries or suggested extra deductions Jess will be in touch via email
  • Once complete we’ll lodge your return with the ATO and send a copy for your records
  • Simple, fast and great value.

Tax Consultation – from $280

  • Phone or Skype appointment with Jess Murray CPA
  • Jess will review your income and expenses and prepare your tax return live on the spot
  • There will also be time to answer any other tax questions you have
  • Once complete we’ll lodge your return with the ATO for you and send you a copy for your records
  • Personal tax service plus all your tax questions answered

All returns include Uber/rideshare business schedule, employment income and expenses, and simple investment income. Rental properties $77. For capital gains, other business income or other complications contact us for a quote.

Visit our Tax Services page to learn more.

 

 

So that’s it. Seven steps to completely manage your tax affairs as a rideshare driver.

 

Quick Hit List for New Drivers

As a final handy reference, if you’ve just started driving or about to start, here’s your immediate to-do list:

  • Get an ABN and Register for GST with DriveTax with our free Startup Pack
  • Find a large envelope to keep in your glovebox for fuel receipts
  • Find another large envelope for receipts at home (insurance bills, toll invoices etc)
  • Buy a logbook from Officeworks
  • Open a savings account with your bank to help you save for your tax bills
  • Does your car insurance completely cover your Uber driving? Get specialist advice. We recommend InsureMyUber by Shielded Insurance.
  • Follow us on Facebook to stay up to date with tax news, tips and due date reminders for rideshare drivers.

If you have questions, or would like more information on our services, feel free to contact us.

All the best with your driving!

 

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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. 

By | 2018-05-18T18:38:50+00:00 February 3rd, 2016|Tax|20 Comments

About the Author:

Hi, I'm Jess. I'm a CPA Accountant and Registered Tax Agent, and I specialise in tax preparation and advice for Uber drivers. As a regular rider in Melbourne, I’ve chatted to many drivers who are facing their first ABN tax return, are confused about their tax obligations, or aren’t sure what to do at tax time. I'm on a mission to relieve the confusion and build a go-to service for Uber drivers across Australia.

20 Comments

  1. […] Seven Steps to Sorting Out your Uber Tax Obligations February 3rd, 2016 […]

  2. […] Seven Steps To Sorting Out Your Uber Tax Obligations February 3rd, 2016 […]

    • Ashish August 2, 2018 at 11:33 am - Reply

      Very helpful post. I must say it has contain some very useful information about the Uber and Rideshare tax obligation. Keep sharing these type of helpful content.

      • Jess August 2, 2018 at 3:18 pm - Reply

        Thanks for the great feedback Ashish!

  3. Big Al October 20, 2016 at 1:31 am - Reply

    Hey Jess

    Great blog and website. I just have a quick questions.

    If I am registered to account for GST on cash basis and use my bank statements to work out my income and complete my BAS, I would obviously not be paying any GST on Uber fees as I never really received it. Do you think it’s OK or should I use Uber Tax Summaries to prepare my BAS. Thanks.

    • Jess October 21, 2016 at 3:00 am - Reply

      Hi Al, the ATO has definite rules on how you should declare your Uber income on your BAS. You must include your Gross Fares + Tolls + Split Fare Fees + Misc Payments + Referrals & Incentives at G1 on your BAS. Then the GST is 1/11th of all of these except for Referrals & Incentives. Then you can include the split fare fees, tolls and Uber fees as expenses at G11, and the GT is 1/11th of the split fare fees and tolls (not the Uber Fees, because Uber never charged you GST on those fees in the first place, so there’s nothing for you to claim back). Essentially, the ATO want the full picture of your income and expenses, not just the net amounts. Thanks! Jess

  4. Jignesh Patel April 5, 2017 at 9:55 am - Reply

    Enjoyed reading the article above, really explains everything in detail, the article is very interesting and effective. Thank you and good luck for the upcoming articles…

    • Jess April 5, 2017 at 11:17 pm - Reply

      Thanks Jignesh, much appreciated! – Jess

  5. Travis August 23, 2017 at 7:27 am - Reply

    Thank you for all the info. Helps immensly. One quick question… when submitting my BAS and total earnings, can i remove the toll fee before taking out GST? For example…

    Earnings paid by UBer totalling $900
    Trip Earnings $850
    Tolls $50

    Do I just pay GST on the $850 as I am actually not earning $50? Just being reimbursed tolls?

    • Jess August 23, 2017 at 12:44 pm - Reply

      Hi Travis,
      The ATO requires you to declare all of the income in the income part of your BAS (G1 and 1A), including split fare fees, tolls and booking fees. Then, in the expenses section (G11 and 1B) you can claim these amounts as an expense as well. So the net result is still zero, because of course you shouldn’t pay tax when it’s just a reimbursement, but the ATO wants to see both sides of the equation. – Jess

  6. Ash February 15, 2018 at 1:35 am - Reply

    Hi Jess,

    Thank you very much for taking time out and clearly explaining intricacies of GST and Tax in layman terms.
    I will appreciate if you can help me with my question too.

    I have been doing UBER for the past one year. I have an ABN and I am registered for GST, which I use for quarterly BAS.

    Now, I am moving into a new – online education business (different from ride-sharing), and I will NOT be doing UBER anymore.

    My questions:

    a. Can I use the same ABN for the new business activity, or apply a new one?
    b. Do I have to continue lodging quarterly BAS as I am doing now?
    c. Do I have to notify ATO about change in business activity?
    d. If my annual income from the new business is less than 75K, will I be liable to pay GST ?

    Thanks in advance Jess.

    Kind Regards
    Ash

    • Jess February 15, 2018 at 11:04 am - Reply

      Hi Ash, The ATO only ever issues one ABN for your lifetime, so you must use this for all your business activities. If you are no longer driving for Uber then you can apply the normal GST registration rules, which is that if your turnover is less than $75k you don’t have to be registered for GST or lodge BAS’s. You may like to consider de-registering for GST from the date you finished driving for Uber. You’ll have to lodge one last BAS for income earned in that final quarter and then no further BAS’s will be required. You can cancel the registration by calling the ATO, and you can advise them of your changed business activity at the same time. – Jess

  7. James May 17, 2018 at 1:37 am - Reply

    Hi Jess,

    Thank you for all the good advice and information for driving with UBER.
    I have just started driving with UBER. I paid for all the licencing, insurance etc in April 2018. My first fare was in the first week of May. I intended to claim for my running costs and expenses at the end of this financial year and complete my BAS up to June 30.
    I am little confused about the Drivetax statement see below. Can you please explain what you mean by claiming for the running costs for 12 continuous weeks? As is started actually driving in May 2018 , the 12 continuous weeks will take me into the next tax year July 2018. How would this work in my tax calculations? Thanks

    End of year tax is a different story. To claim a tax deduction for your car’s actual running costs, you must keep an ATO compliant logbook:
    • It must go for 12 continuous weeks. If you start driving less than 12 weeks before the end of the financial year you can continue the logbook into the next financial year as long as you start before 30 June.

    Regards,
    James

    • Jess May 17, 2018 at 2:59 am - Reply

      Hi James, It’s fine if your 12 week logbook runs into the next financial year. It just means that you will have to wait until the 12 weeks is complete before you can lodge your tax return. Remember a full 12 week logbook isn’t required for BAS’s so you can still go ahead and lodge that based just on whatever logbook records you have so far. It’s only your end of year tax return that requires the full 12 weeks. – Jess

  8. Kris May 24, 2018 at 8:31 am - Reply

    Hi jess,

    Thanks for all the great information..

    I am new to UBER and am a little bit confused in terms of whats tax deductible- i believe the KMs on the actual trip are and i believe the travel to and from jobs to next jobs or driving to locations to hopefully get a trip are too- is that correct ?

    What is the best way to keep a logbook of the KMs please ? I was trying to do it for on way to and trip and from etc but is awkward if rider is waiting when i arrive and i want to write down etc. I was thinking document my days starting KMs then my end of day KMs and then see on the app the total trip KMS eg total KMs on my car from start to finish eg 19600 end of shift 19800 = 200 Kms on the app the actual trips KMS is 75 KMs so means 125 KMs driving to and from, home etc. Is this relevant this way or it depends on what you say is deductible therefore what i need to actually keep a record of

    Hope i haven’t written that too confusingly

    Thank you so much Regards Kris

    • Jess May 24, 2018 at 10:55 am - Reply

      Hi Kris, all of your kms in between trips are deductible too. So for each Uber shift/session you just need one entry in your logbook showing your odometer when you leave home and your odometer when you arrive back home. All of the kms in between are counted as business kms in your logbook. Our blog post on Tax Deductions for Uber Drivers goes into more detail. – Jess

  9. Kris May 27, 2018 at 2:02 am - Reply

    Hi jess,

    Sorry to bother you but was wondering for anything to do with CAR eg depreciation, tax etc- does the registration, insurance, greenslip does it have to be in my name as it is in my husbands name as thats just how it ended up. It is family car i predominately use as my husband has his own car.

    Thanks Kris

    • Jess May 27, 2018 at 1:26 pm - Reply

      Hi Kris, the ATO understands that spouses often have cars registered in each others names for various reasons, and so they still absolutely allow you to claim tax deductions for a car in your spouses name. You just need to make sure you’ve kept a logbook and are recording ALL of that car’s fuel and other expenses. – Jess

  10. Kat June 12, 2018 at 10:12 am - Reply

    Hi Jess,

    Can I fix a salary for myself when I drive uber and pay it to me as salary from the business (uber driving) as well as I will pay super for myself?

    Regards;

    Kat

    • Jess June 12, 2018 at 2:24 pm - Reply

      Hi Kat, when you’re a sole-trader all of the money is already ‘yours’, so you don’t pay it to yourself as a wage. You can make super contributions if you wish, you can read more about this on the ATO website here. – Jess

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