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Being an Uber driver can be a flexible way to make a living or earn some extra income on the side. But it also has tax consequences.

When you drive for Uber, you’re regarded as an independent contract rather than an employee. That means you – not Uber – are responsible for calculating and submitting the correct tax information to the Australian Taxation Office (ATO). Uber only provides you with a tax summary statement; the rest is up to you.

Uber also requires you to register for GST, which means you’re also responsible for filing GST reports with the ATO and making GST payments.

 

What the ATO expects from Uber drivers

The ATO regards Uber drivers as sole traders, which means you must file an individual tax return and fill in the supplementary sections on business and professional items.

You need to select ‘taxi service’ as your type of business and ‘ride-sourcing’ as your main source of business income.

Make sure you report all your earnings – including tips and bonuses – otherwise the ATO will catch you out. That’s because Uber reports all its drivers’ earning histories to the ATO.

You’re allowed to deduct all your direct expenses, such as booking fees, commissions, car, mobile phone and products supplied to your customers, such as wet wipes and bottled water. But you need receipts for all these expenses and must keep them for five years.

However, if you use the same car and mobile phone for personal use, you can’t claim all the expenses for business. In that case, you can only claim the business-related portion of your expenses when filing your tax return.

 

How to become an Uber driver

If you’re thinking about becoming an Uber driver, you don’t just need to abide by ATO regulations; you also need to meet Uber’s rules. That includes:

  • Being at least 21 years of age
  • Holding a valid full driver’s licence for the state/territory in which you drive
  • Using a car that meets Uber’s specifications
  • Having vehicle insurance that lists you as the driver

 

Tax Deductions for Uber drivers

Like any other sole trader, only business expenses are tax deductible for Uber drivers. The ATO allows drivers to claim a large number of deductions as long as there are viable records (receipts) of the transactions, and they were used solely for business purposes. Common claims that are ATO approved include:

  • Fuel expenses (only during Uber trips)
  • Toll and parking fees
  • Fees paid to Uber
  • Car repairs
  • Car cleaning costs
  • Vehicle insurance and registration costs
  • Vehicle expenses (deprecation, lease, or loan payments)
  • Mobile phone, plan, and accessories (aux cord, holder) expenses
  • Miscellaneous (mints, bottled water, wet wipes, tissues, hand sanitiser etc)

If you wish to deduct any of these, it is important that you are able to provide a record, especially for the fuel expenses as this has to be claimed using the Cents per Kilometre method.

It is encouraged that you keep a detailed logbook of the kilometres travelled from each destination, and the odometer at the start and end of the trip.

 

Want to make sure you’re staying in the right lane with the ATO? Get in touch to see how Accounting Excellence can save you time, money and stress by emailing info@accountingexcellence.com.au or calling 0431 981 005.