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:
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:
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