As ride share technology has come to the forefront of Australian culture over the last several years, many questions have arisen regarding the tax implications of this untraditional income stream. Drivers for services like Uber and Ola have a lot of things to consider when it comes to their Australian tax return obligations. Luckily, our professionals have compiled some tax tips for ride share drivers this tax return season. Once you’re ready, remember you can lodge your tax return online with us.
Ride share arrangements occur where:
- You, as a driver, offer a car for public passengers;
- Passengers use a third-party service (facilitator) to request a ride; and
- You use the car to transport the passenger for a fee (fare).
All income earned in this way will need to be declared in your tax return, even if you ride share as a supplement to other income. It’s vital that you declare ride share income in your individual tax return, not in another entity such as a company, partnership or trust, even if you operate through an entity in performing other paid services.
Uber, Ola and Ride Share Obligations
While ride share services have flipped the taxi industry on its head with their more modern, cardless way of getting passengers around, this does not mean being an Uber driver is completely free of paperwork.
Similar tax obligations apply to ride share providers as to traditional taxi drivers. This means you need to keep accurate records of all income and expenses, as well as apportion expenses to the periods you are providing a service.
This is a sticking point for Uber/Ola drivers, as you would typically use a personal vehicle to earn your ride share income. While it can be tempting to fudge some of the numbers to increase your vehicle expense claims, the Australian Taxation Office (ATO) is cracking down on those who cheat the system. So, when lodging your tax return and claiming tax deductions, be truthful – and remember to back yourself up with good record keeping habits.
Ride Share and GST
Put simply, if you’re a ride share provider for any service like Uber or Ola, you’ll need to register to pay Goods and Services Tax (GST). This is because your income activities are classed as an enterprise when:
- You intend to make a profit;
- Operate in a business-like manner; and
- Provide invoices to customers when required. *
Of course, this means before you begin driving you’ll also need to have an Australian Business Number (ABN) too. You can apply for one here at no charge.
You must calculate the 10% GST on the full fare charged to the customer, regardless on the net amount you pocket after your facilitator takes their cut.
This means, if a passenger pays $100 for a fare but Ola pays you $92.50 (after taking their 7.5% commission), the GST payable on that income is $10, not $9.25.
Note: this does not necessarily apply to ride share food delivery services like Uber Eats or Deliveroo, so keep your eyes peeled for more information on those services.
How to lodge your Tax Return Online
At TaxReturn.com.au, we want to make your ride share tax return as easy as possible. We give you the option to lodge your tax return online or over the phone, with experienced tax accountants with you the whole way. We lodge thousands of ride share providers’ tax returns each year, maximising their returns and confidence.
Contact us today to get driving!
*ride share providers need to know how to provide an invoice for fares over $82.50 if requested.