In 2021 Tax Tips

Tax Advice For Uber Drivers

Uber has taken Australia by storm as a great way to earn additional income. But there may be serious Uber tax problems ahead unless you do it right.

Uber is a unique, flexible opportunity to earn a side income for almost anyone with a good car. But there are important things to consider regarding how you manage your taxes.

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

Uber and GST – What’s the story?

Drivers need submit the GST portion of your Uber fares to the ATO in addition to the tax you pay for the income you earn as a driver.

So, right from the start Uber drivers should:

  1. Register for GST and pay GST on fares
  2. Lodge quarterly a BAS statements

If you don’t do this, you’re asking for trouble with the ATO and Uber is unlikely to help you out of your personal ATO troubles – it’s not like the State Transport fines that Uber sometimes covers for you.

How do I pay the ATO’s Uber tax?

If you’re an Uber driver, you’ll need to declare the income you’ve generated in the financial year on your tax return.

Here’s an important warning: Don’t spend all of your Uber income.

Especially if you drive for Uber in addition to another job, it’s important to save a good portion of your Uber earnings.

Why? Because as your income is boosted by your Uber driving, your tax bill is boosted as well. If you don’t save for that, it can be a nasty surprise at tax time. During your first year driving for Uber, you should put aside at least 30, even 40 per cent of what you earn from Uber.

You’ll also be required to lodge a business activity statement (BAS).

Need help predicting how much you should save? It’s not simple, so talk to a tax agent. And when in doubt, save a bit extra; it’s much nicer to get a tax refund than to find you owe money to the ATO.

The tax benefits of being an Uber driver

There are a range of tax deductions you can claim as an Uber driver. Here are just a few work-related expenses that become tax-deductible when you drive for Uber:

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

Along with these expenses, you can claim additional costs that are directly related to becoming and operating as an Uber driver, such as:

  • Work-related parking expenses (keep receipts and add them up, or claim up to $200 a year for your parking charges less than $10 each)
  • Special cleaning costs (car washes, carpet washes etc.)
  • Mints and water for passengers
  • Mobile phone costs (here’s more about claiming work-related phone use)
  • Relevant Spotify, Pandora or Apple subscription fees
  • Stationery

Keep a record of all Uber driving expenses

In order to claim any of the above mentioned deductions, you’ll need to be vigilant. When it comes to claiming costs directly related to your vehicle, you’ll need to keep a record just like you would for any other job.

And with all the kilometres you’ll be driving, you should keep a logbook. This lets you calculate the work-related portion of your car use, in a way that the ATO respects. Then, you can properly claim a wide range of vehicle-related expenses.

Tax Deductions For Uber Drivers

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The first question every rideshare and food delivery driver wants to know is: what tax deductions can I claim for Uber?

Learn how Uber tax deductions work, what you can claim on your Uber tax return, how to keep a logbook, how the instant asset write-off works, what receipts you need and more. This is everything that rideshare and food delivery drivers in Australia need to know about maximising their tax deductions for Uber.

Car Deductions For Uber

There are two different methods available for claiming motor vehicle expenses, the Logbook Method and the Cents Per Kilometre method. You can choose whichever one gives you the biggest tax deduction.

Let’s take a look at these two methods in detail.

Logbook Method

A logbook is used as evidence to the ATO of the percentage you use your car for business use versus private use. If you have kept a valid logbook, you can claim a percentage of your vehicle running expenses, including:

  • 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)

If you wish to claim these expenses, you MUST have a valid logbook. We’ll explain the requirements for a logbook in more detail below.

A quick note regarding depreciation. Depreciation is usually claimed over a number of years, but you may be eligible to claim the Instant Asset Write-Off for small businesses instead. 

The records you’ll need to keep for your car expenses are:

  • Fuel–fuel receipts are the best form of evidence, so we suggest keeping an envelope in your glovebox to collect these. If you don’t have receipts, the ATO will accept your bank statements as evidence. 
  • Other Running Costs – you’ll need receipts or bank records of your registration, insurance, servicing, repairs, tyres, maintenance, cleaning and other costs
  • Car Washes – if you don’t get a receipt for your car washes, the ATO will accept a diary note or other handwritten note with the date and amount of your car wash. Keep a little notebook handy in your glovebox to write these down.
  • Depreciation – you’ll need the tax invoice or purchase details of your car so that depreciation can be calculated.
  • Interest – if you have a loan or finance, you’ll need to determine how much interest you paid (not loan repayments, just the interest) for the financial year. If you don’t have this, you will need to supply us with your original loan documents showing the amount borrowed, repayments, loan term, and interest rate.
  • Lease Payments – if you lease your car, the whole amount of your lease payments are deductible.
  • Logbook – to claim all of the above expenses, you must have a valid logbook. Otherwise, your car expenses are irrelevant, and you’ll be limited to the cents per kilometre method.

The ATO will accept bank records for your end of year tax return, but for your BAS’s, you must have a tax invoice for all business expenses over $82.50 in order to claim the GST back.

Cents Per Km Method

If you haven’t kept a valid logbook, you’ll be restricted to using the Cents per Kilometre Method instead.

You can claim 72 cents per kilometre up to a maximum of 5,000 km. This gives a maximum tax deduction of $3,600. (This rate is for the 2021 financial year onwards, previously it was 68 cents per km).  You don’t have to have specific records of your kilometres.  

Instead, you can make a ‘reasonable estimate’ based on your work patterns, diary notes, records from Uber/the company you drive for, etc. Note that you can claim the kilometres in between trips as well as kilometres while you have a passenger or are making a delivery. You can also claim kilometres between home and your first trip and from your last trip back home again.

If you’ve been driving more than just a small amount, then $3,600 may be much less than your actual car expenses. This would give you a lower tax deduction and, therefore, a bigger tax bill. We recommend unless you are just an occasional driver, you should keep a logbook so that you don’t miss out on claiming all of your expenses.

Keeping A Logbook For Uber

Here are the essentials of keeping a logbook:

  • It must go for 12 weeks. It’s okay if the 12 weeks go past the 30th of June (e.g., keep your logbook from May-July). But you must start before the 30th of June for it to count for the current year.
  • You only need to make one logbook entry for each shift/session of Uber driving, you don’t need to record individual deliveries. You also don’t need to record private/non-business trips.
  • You must record the date and the odometer reading of your car at the start and end of each shift/driving session.
  • You should start your logbook when you leave home, switch on your delivery app, stop when you arrive back home, or switch off the app. Your kms to and from home and your kms in between deliveries can all be included.

The Free DriveTax Uber Logbook Spreadsheet is the easiest way to track your kilometres, and it does all the adding up and calculates your percentage for you.  If you prefer a physical paper logbook, we recommend the Zions Pocket Logbook, which you can buy from Officeworks for under $7. Using an app is also fine, as long as you are still recording your odometer readings.

It’s important to note that the kilometre records that Uber sends you are not enough to meet the ATO’s logbook requirements because they don’t show your car’s odometer readings. They also don’t include your kms in between trips, so you’ll be missing out on tax deductions!

Other Uber Tax Deductions

Other rideshare related expenses that will be tax-deductible include:

  • Uber Service Fees – these are the fees that are deducted from your Uber fares, essentially Uber’s commission
  • Other Fees – application fees, medical tests, police check, driver accreditation, driver training etc
  • Rider Amenities – water, mints, newspapers, tissues etc
  • Tolls – you can claim tolls while on trips and tolls in between trips as well
  • Parking – if you don’t get a receipt, and the amount is under $10, you may write a diary note instead, just as for car washes above.
  • Cleaning Costs – You can claim the whole amount for specific passenger incidents, but general cleaning costs, such as car washes, must have your logbook percentage applied.
  • Safety Equipment – hi-visibility clothing, sunglasses, sunscreen (though if you use them when not driving as well, you must specify a percentage of Uber use)
  • Sanitation & Hygiene – masks, hand sanitiser, sanitation wipes
  • Equipment and Accessories – dashcam, seat covers, mobile phone holder
  • Mobile Phone Bills – you can claim a percentage of your mobile phone bill 
  • Home Office Expenses – stationery, computer expenses, a percentage of your home internet bill
  • Music Apps
  • Bank Fees – but only if you have a separate bank account just for Uber
  • Tax Agent’s or Accountant’s Fees

Costs that are not tax-deductible include:

  • Clothing – Clothing is a personal expense. Only safety wear, such as hi-visibility clothing or steel cap boots, is deductible.
  • Personal Hygiene – deodorant, haircuts etc
  • Personal Comfort or Health – driving long hours is understandably hard on the body, but backrests, cushions, physiotherapists, massages and all other expenses relating to your bodily wellness or comfort are considered personal and are not deductible.
  • Meals – you cannot claim for food or coffee for yourself
  • Fines – even if directly related to Uber
  • Driver’s Licence – your normal drivers licence is considered a private expense.

If you have expenses that you’re not sure are deductible, keep the receipts anyway and let your accountant advise you whether they can be claimed at tax time.

If you’re a rideshare driver, keep in mind that some Uber and ridesharing expenses are claimable on your tax return but not your BAS or vice versa. Head to our Uber BAS Ultimate Guide to learn what expenses you can claim on your Uber BAS

Claiming GST On Your BAS

Suppose you do rideshare driving, in addition to your end of year income tax return. In that case, you must lodge a Business Activity Statement (BAS) to the ATO every quarter to pay GST on your Uber income.

You can claim GST credits to offset your GST bill, just like claiming tax deductions. However, there are some differences in what expenses you can claim and what receipts you need to keep. 

Uber Tax Issues: A Tax Guide For Uber Drivers

Uber has taken Australia by storm as a great way to earn additional income. But there may be serious Uber tax problems ahead unless you do it right.

Uber is a unique, flexible opportunity to earn a side income for almost anyone with a good car. But there are important things to consider regarding how you manage your taxes.

If you start to drive for Uber without some good tax planning, you could soon have an ATO tax debt in the thousands, even tens of thousands of dollars.

Don’t worry: Just a bit of planning and organisation can help ensure you’re on track for a friendly relationship with the ATO.

Uber Tax And GST – Get In The Know!

When you drive for Uber, you are not an employee. You’re a contractor. Here’s why that is important: When you’re not an employee, you have to be careful that your tax affairs are managed correctly. That’s why most Uber drivers should use a tax agent.

From Uber themselves:” All Uber partners are independent contractors, so we do not withhold any taxes, and partners are entirely responsible for their own tax obligations.”

The ATO’s Uber tax implications are straight-forward at a basic 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?

wealth management concept, business man and team analyzing finan

Drivers need to submit the GST portion of your Uber fares to the ATO in addition to the tax you pay for the income you earn as a driver.

So, right from the start, Uber drivers should:

  • Register for GST and pay GST on fares
  • Lodge quarterly a BAS statements

If you don’t do this, you’re asking for trouble with the ATO, and Uber is unlikely to help you out of your personal ATO troubles – it’s not like the State Transport fines that Uber sometimes covers for you.

How Do I Pay The ATO’s Uber Tax?

If you’re an Uber driver, you’ll need to declare the income you’ve generated in the financial year on your tax return.

Here’s an important warning: Don’t spend all of your Uber income.

Especially if you drive for Uber in addition to another job, it’s important to save a good portion of your Uber earnings.

Why? Because as your income is boosted by your Uber driving, your tax bill is boosted as well. If you don’t save for that, it can be a nasty surprise at tax time. So during your first year driving for Uber, you should put aside at least 30, even 40 per cent, of what you earn from Uber.

You’ll also be required to lodge a business activity statement (BAS).

Need help predicting how much you should save? It’s not simple, so talk to a tax agent. And when in doubt, save a bit extra; it’s much nicer to get a tax refund than to find you owe money to the ATO.

The Tax Benefits Of Being An Uber Driver

There are a range of tax deductions you can claim as an Uber driver. Here are just a few work-related expenses that become tax-deductible when you drive for Uber:

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

Along with these expenses, you can claim additional costs that are directly related to becoming and operating as an Uber driver, such as:

  • Work-related parking expenses (keep receipts and add them up, or claim up to $200 a year for your parking charges less than $10 each)
  • Special cleaning costs (car washes, carpet washes etc.)
  • Mints and water for passengers
  • Mobile phone costs
  • Relevant Spotify, Pandora or Apple subscription fees
  • Stationery

Keep A Record Of All Uber Driving Expenses

In order to claim any of the above-mentioned deductions, you’ll need to be vigilant. When it comes to claiming costs directly related to your vehicle, you’ll need to keep a record just like you would for any other job.

And with all the kilometres you’ll be driving, you should keep a logbook. This lets you calculate the work-related portion of your car use in a way that the ATO respects. Then, you can properly claim a wide range of vehicle-related expenses.

Popular second-income sources like Ebay, Airbnb and Uber make some people wonder, “Can I just spend my extra income and leave it off of my tax return?”

There’s a very simple answer to that: Don’t do it! 

Your activity as an Uber driver is very much “out there” for the world to see. Your name and plate number are shown right on the Uber app. The ATO can easily determine your actual income from Uber. The ATO can even see your bank accounts if they want to.

It will be simple for the ATO to find Uber drivers who don’t declare (or who under-report) their income. The likely consequences for people who hide their Uber income: Huge tax repayments, fines and interest charges. The ATO does not play games with this sort of thing, and it is not taken lightly.

Be honest and transparent with the ATO. You’ll be better off in the end, and you’ll sleep well at night.

However, consult a tax agent for personalised Uber tax advice and be sure you follow the right procedures to keep everything accurate for the next tax season.

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