A tax guide for Uber drivers

Uber is a unique, flexible opportunity to earn a side income for almost anyone with a good car. However, there is a multitude of factors to consider about 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.

When you drive Uber, you would be termed as a sole trader and you would be required to have an ABN and be registered for GST. According to the latest regulations, you are required to be registered for GST from at least 1st August 2015. Uber drivers should register for GST then start to lodge quarterly a BAS statement and pay GST obligations.

The ATO’s Uber tax implications are straightforward 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, as an Uber driver you need to register for GST.

If you are an Uber driver, you’ll need to declare the income you’ve generated in the financial year on your tax return. If you drive Uber in addition to another job, it is important to save a significant portion of the earnings to conform to the tax liability. The best way to estimate is use your marginal tax rate and add 2% for Medicare.

This is becauseUber driving boosts your income, your tax bill is boosted as well. If you do not 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.

Uber drivers are also required to keep another 10% aside for GST, as Uber does not explicitly charge GST. Please contact us for further information.

Benefits

However, it is not all bad for Uber drivers. As you are using your car for earning income, you can claim a range of expenses to net against your income, like :

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

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