Uber Income is an awesome side hustle however you still need to pay your tax and you can’t just ‘drive away’ from your ATO taxes.
The Uber craze has taken Australia by storm with many people doing it for earning additional income. You need to do it right else you’ll end up in Tax trouble. It’s advisable to have good tax planning and ensure you are operating with the correct registrations in place.
When driving for Uber you are not their employee but Ubers contract with its drivers treats you as a contractor. It’s important to be careful that your tax affairs when you’re not an employee and we recommend seeking tax advice from a registered Tax Agent. As an Uber driver – Uber does not withhold your taxes and you as the driver are responsible for your own tax obligations.
The ATO requires all rideshare drivers (Uber included) to register for GST even if you earn less than the $75,000 GST income threshold, as an Uber driver you need to register for GST. To register for GST you need to have an ABN (Australian Business Number). 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 for free on the ATO website.
From August 2015, the ATO confirmed all Uber drivers are required to register for GST. This means you submit the GST portion of your Uber fares to the ATO. This is in addition to the tax you need to pay for income you earn as a driver.
Some people will say ‘What if I don’t register, how will the ATO know?’ In 2015 the ATO sent letters drivers who had received income from Uber, either confirming that they’d checked and found the driver’s affairs to be in order, or advising they’d been identified as non-compliant and must register for GST and pay the required tax immediately or be penalised. Don’t be caught on the wrong side of the law.
GST is simply calculated as 10% of whatever fare the Uber rider is charged. As you are operating as a business, some of your expenses where you have paid GST can be claimed back to offset your GST obligation from fares, you’ll need to seek advice from your tax advisor.
You’ll also be required to lodge a business activity statement (BAS), either monthly, quarterly or annually depending on your preference.
The best way to maximise your tax deductions is good record keeping. There are many options and you can use whatever system works best for you, be it software, spreadsheet or a shoebox system.
It’s also advisable to keep a log book as Uber only provides you mileage you’ve done when you were carrying a rider but does not record the time you travel looking for your next pickup. With this you are able to prove a work-related percentage of your car use.
See our calculator below to help you estimate your GST obligation
To read instructions on how to use the calculator click here