The tax obligations of Uber drivers

The growth of ride-sharing services such as Uber has provided thousands of Australians with a great way to earn a side income. However,it could also leave its drivers with an unwanted tax bill should they be unaware of its tax implications.

From August 2015, the Australian Tax Office (ATO) confirmed all Uber drivers are required to register for GST. This means that drivers must account for GST on all their fares and can claim GST back on most of their expenses by submitting a quarterly Business Activity Statement (BAS).

The ATO has recently advised that it will be collecting data to identify individuals engaged in providing ride-sourcing services during the 2016/17 and 2017/18 financial years. It will be targeting over 60,000 drivers registered in Australia, most of them Uber drivers, by obtaining information from banks and other financial institutions.

The ATO will obtain details of payments made by drivers to ride-sourcing providers like Uber, including data items such as:

  • Payee account name
  • Payee BSB
  • Payee account number
  • Date of payment to the payee
  • Amount of payment to the payee

The ATO has stated that the purpose of the data matching is to ensure that drivers are correctly meeting their taxation obligations in relation to ride sourcing payments..

Mark Chapman, Tax Communication Director at H&R Block, offers the following general tax tips for Uber drivers:

  1. If you haven’t registered for GST, do it! The ATO is cracking down on Uber drivers who have not complied with their stipulation that Uber drivers must be GST registered.
  2. Your gross Uber income must be declared on your income tax return
  3. You can claim deductions for all costs which relate exclusively to your Uber activity such as:
  • Fees and commissions paid to Uber
  • Provisions of water and mints to passengers
  • Costs of insurance relating to your Uber activity
  • Motor vehicle costs related to your Uber activity. Remember to keep a logbook and remember too that you can claim for the costs of driving to, from and between pick-ups, as well as the costs liked to the actual fare-paying journey. Claim for things like fuel, servicing, cleaning, etc.
  1. You can claim depreciation on capital items used in your business, notably the car itself. You can claim the $20,000 instant asset write-off for capital items costing less than $20,000 purchased before 30 June 2017. That could include items such as laptops, tablets and even the cost of a car itself (it may need to be second hand to come in under the $20,000 threshold).
  2. You can claim a deduction for the business-related proportion of certain other costs, such as expenses incurred in running a home office, mobile phone bills, Internet fees.

Chapman warns that Uber drivers who aren’t complying with tax laws – by failing for register for GST for instance, or not including ride-sourcing income on their tax return – are playing with fire and are likely to be caught up in the ATO’s current compliance sweep. As a result, they may face penalties and interest, or even prosecution. He advises that affected drivers should be proactive in getting their tax affairs up to date before the ATO come knocking.

Inside Small Business

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