Uber has recently launched in Newcastle and is taking our city by storm by offering Novocastrians an alternative to taxis and the opportunity to make some extra money. However there could be potential tax implications that you may not be aware of.
Uber is a digital ride-sharing service that provides a flexible new way for drivers to earn money and essentially allows the public to use their vehicles as a taxi service.
While this may be a speedy way to make some extra cash, if you are an Uber driver then it is important to know what your tax obligations are.
As an Uber driver you are not an employee, but an independent contractor and any money you make as an Uber driver is classified as income and must be declared on your tax return. Furthermore, in August 2015 the Australian Taxation Office (ATO) confirmed that they are classifying Uber drivers as providing taxi travel. This means Uber drivers are required to obtain an Australian Business Number (ABN) and must register for GST, or face significant penalties.
Generally entities with turnover under $75,000 are not required to be registered for GST, however if you are an Uber driver this threshold does not apply to you. This means Uber drivers are liable to pay GST on every dollar they earn.
How do I register for an ABN and GST?
You can register online for an ABN and GST or your accountant can register on your behalf.
What are my tax reporting obligations?
As previously stated any money you earn as an Uber driver must be declared on your tax return. You are also required to lodge business activity statements and pay GST every quarter.
What documents should I keep?
Expenses you incur from being an Uber driver may be tax deductible. This may include expenses that relate to holding, maintaining or operating your motor vehicle, parking costs, mints and water for passengers or mobile phone costs.
When claiming motor vehicle expenses it is important to keep a logbook otherwise your motor vehicle deduction may be reduced. A logbook needs to be kept for a 12-week period and is used to calculate the proportion of expenses that you can claim.
Further details in relation to your tax obligations can be found on the ATOs website.
It is important to note that Uber are currently challenging the ATO in relation to their drivers GST obligations. Uber argue that its drivers should only be required to register for GST if they have a turnover of more than $75,000 a year. However it is better to be safe than sorry. Don’t try to hide your Uber income from the ATO. The ATO have an extensive database and numerous resources. The last thing you want to be faced with is a significant tax bill.
Disclaimer: This article is not advice and should not be relied upon. For specific tax advice you should contact your tax agent.
Daniel Velich is a Senior Accountant at Lambourne Partners and is experienced in both business services and superannuation.
He holds a Bachelor of Commerce and is a Chartered Accountant. Daniel is also a Fellow of The Tax Institute and was a finalist at the 2015 Australian Accounting Awards.