A Roy Morgan study published in December 2017, found that nearly 3.7 million Australians travelled by Uber in the last three months. This is despite ongoing protests from the taxi industry and lag in the regulatory framework to accommodate for ride-sourcing platforms.

There are now over 80,000 drivers earning an income via the ride-sourcing platform in Australia.

Note, illegality has no bearing on the application of taxation law.

WHAT YOU NEED TO KNOW

“Uber Partners” who drive for Uber are not employees of Uber. They are contractors. Contractors must arrange their own tax affairs including obtaining an Australian Business Number (ABN). Understanding the tax obligations as an Uber driver is important.

Here are some important factors for you to consider as an Uber driver:

  1. Tax is payable on the gross Uber fare at your marginal tax rate
  2. You must register for GST even if you earn less than $75,000 and therefore must lodge Business Activity Statements (BAS’s)
  3. As Uber is an American Company, there are no GST credits on the Uber Commissions deducted from your fare
  4. The losses from Uber driving can only offset your taxable income if you pass one of the Non-Commercial Loss rules

INCOME TAX

Assessable income is not as easy as it seems. It is the net GST amount of the gross Uber fare. Note, Uber deducts 20% of the commission from the total Uber fare.

Picture this

Allison received $25,000 in gross Uber fares in this income year.

Gross fare $25,000
Deduct 10% GST ($2,272)
Assessable income (Taxed at Allison’s marginal tax rate) $22,728
Deduct 20% Commission ($25,000 x 20%) $5,000
Profit $17,728

DEDUCTIONS

Uber driving is a business. Therefore, there is a wide range of deductions you can claim against your Uber income for your tax return.

It is also important that you keep a record of all your expenses to discuss with your personal tax adviser.

Deductible vs Non-deductible:

Typically deductible
  • Uber commission (20% of fare)
  • Car expenses (registration, insurance, repairs, fuel, depreciation)
  • Water, mints etc. for riders
  • Accountant fees
  • Parking costs and tolls
  • Phone and internet costs
  • Initial police check
  • Sunglasses (protective)
Typically non-deductible
  • Personal clothing (private)
  • Personal costs (E.g. personal hygiene products)
  • Expenditure on meals (private)
  • Speeding and parking fines
  • Cost of getting a drivers licence

GOODS AND SERVICES TAX (GST)

Uber services are treated the same as the Taxi driving sector, therefore, you must be registered for GST from the first dollar earned as an Uber driver. This means you must pay one-eleventh of GST to the ATO on every dollar earned from Uber driving.

You can claim Input Tax Credits (ITC’s) for acquisitions relating to the Uber Enterprise, however, some expenses do not have ITC’s.

You may be required to lodge an annual GST return or quarterly BAS’s depending on your circumstance.

Speak to your tax adviser to fully understand the tax implications of engaging in ride-sourcing activities stated in this article.

This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.