This week I travelled to Brisbane to meet with some potential new clients and to attend a board meeting. While I was in Brisbane I used Uber to get around the city. It was a great experience and it got me thinking about some important tax considerations if you are (or if are thinking about becoming) a ride sharing driver. Here are some things you will need to consider as a ride sharing driver:
You need to be GST registered
Most businesses only need to register for GST when their turnover is expected to exceed $75,000. However, for GST purposes ride sharing drivers (like an Uber Driver) are treated as taxi drivers and need to be registered for GST regardless of their annual income (there is no minimum threshold amount). Check out this ATO article for more information.
You need an ABN
As all ride sharing drivers need to be registered for GST you will also need to apply for an Australian Business Number (if you don’t already have one). Your GST registration and ABN application can be lodged online at the same time.
You will need to lodge Quarterly Business Activity Statements
GST needs to be charged on all your fares. Practically, your ride sharing provider (like Uber) should look after this for you. However, you will need to report all your fares on a quarterly Business Activity Statement which needs to be lodged with the ATO. You will also need to pay the GST you have collected on your fares to the ATO by the due date of each quarterly Business Activity Statement. It could be worth considering having a separate bank account where you put aside the GST you collect on each fare so that you have this money handy come the end of each quarter.
You will need to report your ride sharing income on your tax return
All ride-sharing income is treated as business income and must be reported on your tax return. The good news is that you can claim deductions for expenses incurred in earning this income (eg. fuel, car depreciation, etc). The ATO has a helpful fact sheet on motor vehicle expenses for small businesses which can be downloaded here.
If you need any helping getting your registrations in place or in meeting your ongoing compliance requirements as a ride sharing driver please do not hesitate to contact us.