Tax Advice For Uber Drivers

Australia is a beautiful country with some of the most diverse landscapes in the world. The land down under has everything from rainforests to deserts and many more natural wonders that are scattered across this island nation.

One thing that almost all Australians have in common, though, is their tax obligations. So it’s a citizen of Australia needs to be aware of these obligations to pay what they owe on time each year without any issues or fines incurred.

This post will outline how Uber drivers need to handle their tax obligations while working in Australia, so you don't get anything wrong when filing your taxes at the end of the year.

Uber drivers are often unsure of their tax obligations. In Australia, the ATO (Australian Tax Office) has made it clear that all Uber driving earnings are taxable and need to be declared as income on your annual tax return.

Australian taxpayers need to declare any income earned in a given financial year to the ATO by lodging an Income Tax Return by 31 October following the end of that financial year.

The Tax Office provides guidance about how much you should declare, but if you're not sure what figure they recommend, then it's best to err on the side of caution and over-declare rather than under-declare

Tax Tips For Uber Drivers

Your income tax return must include information about any assessable income you receive from driving for Uber.

Tax deductions will be given for costs related to driving for Uber. The holding, upkeep, or operation of any assets needed to deliver the ride services may be included in these costs.

Claiming Work-Related Tax Deductions

The following items are eligible for deductions based on their proportional business use:

• money given to Uber for commissions, licenses, or services.
• once the formal application process has started, there may be costs associated with being an Uber driver. These costs could include paying application fees, paying for medical and police checks, etc. No deduction is permitted for expenses spent before to applying to become an Uber driver or before the application process begins, such as traveling to informational events.
• expenditures for passengers such as water and mints or gasoline taxes
• parking fees, vehicle registration, or phone bills
• safety apparatus (such as hi-vis vests)
• vehicle maintenance, repair, and cleaning costs Insurance Tax Agent/Accountants Fee Bank Fees (if you maintain a separate account for your Uber work)

Work-related tax deductions cannot be claimed for:

• costs of a normal drivers licence
• fines (parking, speeding, etc.)
• clothing other than safety clothing
• meals, drinks, etc. purchased whilst on shift
• Claiming a deduction for business use of your car

There are two ways you can write off the cost of using your car for work:

• Cents per kilometre:
  • For years prior to July 1, 2020, claim 68c per kilometer or 72c per kilometer.
  • Even if you have traveled more than 5,000 miles, you can only claim for that amount using this approach.
  • Only distances up to 5,000 km can be covered using this strategy. Therefore, even if your business requires you to travel more than 5,000 miles, you can only use this strategy to claim up to 5,000 kilometers (for each automobile).
• Logbook:
  • Your claim is based on the business use proportion of each car expense, which is established by a logbook that must have been kept for a minimum 12 week period.
  • Every five years, this logbook needs to be updated.
  • You may deduct all operating costs for the vehicle at your percentage of business use, as determined by your logbook.

Claiming an Immediate Deduction for Capital Expenses

The ATO considers you a self-employed Uber driver. That implies that you are eligible for all tax breaks offered to small firms, including the provision for the temporary full expensing of capital items through June 30, 2022. (this will be extended to 30 June 2023 under the 2021-22 budget proposal).

That means, regardless of their cost, you can instantly deduct the cost of any machinery, tools, or equipment you use for your business, such as computers and even vehicles (very handy for Uber drivers buying new or second-hand cars).

Registering For GST

If you drive for Uber, you must register with the ATO for GST and begin adding GST to all of your fare payments at the first dollar. Your purchases for work-related purposes are also eligible for GST credits. A BAS form must be submitted every three months.

The GST status of other business activities you engage in may change if you file for GST as a result of your Uber operation. Therefore, you may need to start accounting for GST in regard to both your small business and your Uber driving if it has a revenue of less than $75,000 and you are a sole proprietor.

Tax Deductions For Uber Drivers

What tax deductions can I claim for Uber is the first query that every ridesharing and food delivery driver has.

Learn more about how to keep a logbook, how the quick asset write-off works, what receipts you need, how Uber tax deductions operate, and what you can claim on your Uber tax return. This is all the information Australian drivers for ridesharing services and food delivery services need to maximize their tax deductions for Uber.

Car Deductions For Uber

The Logbook Method and the Cents Per Kilometre Method are the two accessible ways to deduct motor vehicle expenses. You can select the option that offers you the most tax deduction.

Let's examine these two approaches in greater detail.

Logbook Method

A logbook is intended to show the ATO how much of your car you use for business vs personal purposes. If you've maintained a valid logbook, you may deduct a portion of your vehicle's operating costs, such as:

• fuel
• registration
• insurance
• servicing, repairs, tyres and other maintenance costs
• cleaning costs
• depreciation on the purchase price of your car (if you own your car)
• interest (if you have a loan on your car)
• rental/hire/lease fees (if you lease/rent your car)

A proper logbook IS REQUIRED if you want to recover these costs. The specifications for a logbook are described in greater detail below.

A brief word on depreciation. Depreciation is often claimed over a number of years, however if your business is a tiny one, you could be able to use the Instant Asset Write-Off instead.

You must preserve the following documents for your automotive expenses:

• The greatest form of proof is a fuel-fuel receipt, thus we advise keeping an envelope in your glovebox to collect these. The ATO will accept your bank statements as proof if you don't have any receipts.
• Other Running Costs - You'll need to keep track of your registration, insurance, service, repairs, replacement tires, maintenance, cleaning, and other expenses with receipts or bank records.
• Car washes - The ATO will accept a diary entry or other handwritten note with the date and cost of your car wash if you don't receive a receipt for your car washes. Keep a little notebook close at hand in your glove compartment to record these.
• Depreciation: To calculate depreciation, you'll need the tax invoice or purchase information for your car.
• Interest: If you have a loan or other form of financing, you must figure out how much interest you paid over the fiscal year (not including loan repayments). If you don't have this, you must give us your original loan documentation, which must include the loan amount, repayment schedule, loan length, and interest rate.
• Lease Payments: If you lease your vehicle, all of your lease payments are tax deductible.
• Logbook: You need a current logbook in order to deduct all of the aforementioned costs. Otherwise, your car expenses won't matter and you'll just have the cents-per-kilometer approach available to you.

For your year-end tax return, the ATO will accept bank records; however, in order to claim GST back on your business expenses exceeding $82.50, you must have a tax invoice.

Cents Per Km Method

You can only use the Cents per Kilometre Method if you haven't maintained a valid logbook.

Up to a total of 5,000 kilometers, you may claim 72 cents each mile. The maximum tax deduction is thus $3,600. (This rate will apply starting with the 2021 fiscal year; the previous fee per kilometre was 68 cents.) You are not need to keep detailed records of your mileage.

Instead, you can calculate a "reasonable estimate" using your work schedule, diary entries, data from Uber or the company you work for as a driver, etc. Keep in mind that you can deduct both the miles driven between trips and the miles driven while transporting a passenger or completing a delivery. Additionally, you can add up the distance traveled from your house to both your first journey and your last trip back home.

If you've been driving more than sometimes, $3,600 can be considerably less than what you've actually spent on your automobile. As a result, you would have a smaller tax deduction and a higher tax bill. We advise keeping a logbook unless you only drive sometimes in order to ensure that you are able to deduct all of your expenses.

Keeping A Logbook For Uber

Here are the requirements for maintaining a logbook:

• The duration is 12 weeks. It's acceptable if the 12 weeks continue past June 30. (e.g., keep your logbook from May-July). To count for the current year, though, you must begin before June 30.
• For each shift or session that you drive for Uber, you just need to enter one entry in your logbook; individual deliveries are not required.
• Additionally, you are not required to document non-business/private trips.
• At the beginning and end of each shift or driving session, you must note the date and the car's odometer reading.
• When you leave the house, turn on your delivery app, start your logbook, and either stop when you get back home or turn the app off.
• You can include your travel distance to and from home as well as the distance between delivery.

The simplest method to keep track of your miles is to use the Free DriveTax Uber Logbook Spreadsheet, which automates all the math and figures out your percentage for you. For roughly $7, you may get the Zions Pocket Journal from Officeworks if you would rather keep a physical paper logbook. It's acceptable to use an app as long as you continue to log your odometer readings.

Because they don't include your car's odometer readings, the kilometer records that Uber delivers you are insufficient to satisfy the ATO's logbook requirements. You won't be able to claim tax deductions because they don't count the kilometers you travel between trips.

Other Uber Tax Deductions

Additional rideshare-related costs that qualify as tax deductions include:

• Uber Service Fees are the charges subtracted from your fares; they serve as Uber's commission.
• Application expenses, medical exams, police checks, driver accreditation fees, driver training fees, and other fees
• Water, mints, newspapers, tissues, and other amenities for riders
• You can claim tolls both while traveling and in between trips.
• Parking: Just like with vehicle washes above, if you don't get a receipt and the total is under $10, you can put a note in your diary in its place.
• Cleaning Costs - You may deduct the full amount for particular passenger issues, but you must apply your logbook percentage to  general cleaning expenses like car washes.
• Safety gear includes eyewear, high-visibility clothing, and sunscreen (though if you use them when not driving as well, you must specify a percentage of Uber use)
• Masks, hand sanitizer, and sanitation wipes are included in sanitation and hygiene.
• Dashcam, seat coverings, and phone holder among the equipment and accessories
• Mobile Phone Bills: A portion of your mobile phone bill may be claimed.
• Stationery, computer costs, and a portion of your home internet fee are examples of home office expenses.
• Apple Music
• Bank charges, but only if you have a separate bank account set up solely for Uber Tax Agent or Accountant charges.

The following expenses are not tax deductible:

• Clothing is an individual expense. Only safety gear like high visibility clothes or boots with steel toes are deductible.
• Personal care products including deodorant and haircuts
• Driving for long periods of time is obviously taxing on the body, but backrests, cushions, physiotherapists, massages, and any other costs associated with your physical well-being or comfort are considered personal expenses and are not tax deductible.
• Meals: You are not allowed to claim for your own food or coffee.
• Even if they are directly related to your usual drivers license, fines are still seen as a private expense.

Keep the receipts for any costs you're not sure are deductable and ask your accountant whether you may claim them when it comes to taxes.

If you drive for a rideshare company, bear in mind that some of your expenses may be deducted from your tax return but not from your BAS, or vice versa. Find out what expenses you can write off on your Uber BAS by visiting our Uber BAS Ultimate Guide.

Claiming GST On Your BAS

Consider that in addition to filing your annual income tax return, you drive for ridesharing services. In that instance, in order to pay GST on your Uber income, you must submit a Business Activity Statement (BAS) to the ATO each quarter.

Similar to requesting tax deductions, you can claim GST credits to reduce your GST charge. What you can claim as costs and what receipts you must keep varied slightly, though.

Uber Tax Issues: A Tax Guide For Uber Drivers

Uber has completely taken over Australia as a fantastic method to make extra money. But if you don't handle it correctly, you can have serious Uber tax issues in the future.

Uber is a special, flexible way for practically anyone with a good automobile to make some extra money. However, there are crucial factors to take into account while managing your taxes.

Without careful tax planning, you can soon owe the ATO thousands or perhaps tens of thousands of dollars in back taxes if you start driving for Uber.

Don't worry; with a little organization and planning, you can make sure that you're on the right route for a cordial relationship with the ATO.

Uber Tax And GST – Get In The Know!

You are not an employee when driving for Uber. You're a freelancer. This is significant because you must carefully manage your tax affairs when you do not have an employer. Thus, the majority of Uber drivers ought to work with a tax advisor.

According to Uber, all partners are independent contractors, so no taxes are withheld from their pay, and each partner is solely responsible for their own tax requirements.

Uber's tax consequences for the ATO are simple to understand on a fundamental level:

• Any money you make driving for Uber counts as income, meaning you must declare it on your Tax return.
• Even if you earn less than the $75,000 GST income threshold, you need to register for GST as an Uber driver.

Uber And GST – What’s The Story?

Along with the tax you pay on the money you make as a driver, drivers also need to submit the GST component of their Uber fare to the ATO.

Because of this, Uber drivers should:

• Pay GST on airfare and register for GST
• BAS statements should be filed periodically.

If you don't do this, you could get into trouble with the ATO, and Uber isn't going to help you with that since it's not like the State Transport fines that they occasionally pay for you.

How Do I Pay The ATO’s Uber Tax?

If you drive for Uber, you must report your earnings on your tax return for the entire fiscal year.

A word of caution: Don't blow your entire Uber revenue.

It's crucial to preserve a sizable amount of your Uber earnings, especially if you drive for Uber in addition to working another job.

Why? Because driving for Uber increases both your income and your tax burden. It could come as a rude surprise at tax time if you don't save for it. Therefore, you should set aside at least 30%, if not 40%, of your Uber earnings throughout your first year of driving.

Additionally, you must provide a company activity statement (BAS).

Having trouble estimating how much money you should set aside? Consult a tax agent because it's not easy. When in doubt, save a little more; it's much more pleasant to receive a tax refund than to learn you owe the ATO money.

The Tax Benefits Of Being An Uber Driver

As an Uber driver, you are eligible for a number of tax breaks. When you operate as an Uber driver, the following work-related costs are now tax deductible:

• Registration
• Insurance
• Repairs
• Tyres
• Car maintenance
• Car cleaning costs

You can also deduct other charges that are directly connected to signing up to be an Uber driver and conducting business as one, such as:

• Parking costs related to your job can be claimed up to $200 per year if you retain your receipts and sum them up.
• Additional cleaning fees (car washes, carpet washes etc.)
• Passengers' water and mints
• Cost of a mobile phone
• Relevant subscription costs for Apple, Pandora, or Spotify
• Stationery

Keep A Record Of All Uber Driving Expenses

You must be watchful if you want to claim any of the aforementioned deductions. You must keep a record for any expenses you claim that are specifically related to your car, just as you would for any other work.

You should keep a journal with all the miles you'll be driving, too. This enables you to determine the portion of your car use that is related to work in a manner that the ATO accepts. Then, you are legally able to deduct a variety of vehicle-related expenses.

Some people question if they may simply spend their extra money and not report it on their taxes when they receive it from well-known second-income sources like Ebay, Airbnb, and Uber.

That has a pretty easy solution: Don't do it!

Being an Uber driver puts a lot of your activities "out there" for the public to see. The Uber app clearly displays your name and license plate number. Your actual earnings from Uber are easily ascertainable by the ATO. If they so want, the ATO can even view your bank accounts.

Finding Uber drivers who fail to declare (or who underreport) their income will be simple for the ATO. People who conceal their Uber revenue may face severe tax penalties, fines, and interest charges. This type of thing is taken seriously by the ATO and is not handled frivolously.

Be truthful and open with the ATO. In the end, you'll come out ahead, and you'll get a good night's sleep.

To ensure everything is accurate for the upcoming tax season, speak with a tax professional for personalized advice on Uber taxes.