Anyone who provides ride-sharing services through Uber or similar companies must now register for both an Australian Business Number (ABN) and GST.

Uber trips have been classified by the Australian Tax Office (ATO) as ‘taxi travel’. This means the usual GST threshold of business income of $75,000 does not apply.

Uber challenged the ATO decision, but recently lost the case in the Federal Court.

What does this mean for Uber drivers?

In short, all Uber drivers must:

• Keep accurate records
• Register for an ABN and GST, regardless of turnover
• Charge and collect GST on the full fare from each trip
• Lodge business activity statements that include income from ride sourcing
• Pay any GST liability
• Report the income in their tax returns.

On the plus side, Uber drivers can claim a tax deduction and GST credits on the expenses incurred in providing ride-sharing services. This includes a portion of car servicing costs, cleaning, registration, tyres, repairs, fuel and insurance.

Uber drivers who think it’s worth the risk of ignoring these requirements should bear in mind that the ATO has flagged a crack-down on Uber and other ride-sharing services. They will be looking at all payments made by the relevant company to drivers and using electronic data matching to identify operators who do not comply with their tax obligations.

Drivers should also remember that any income from their Uber activities will be added onto earnings from other sources and taxed at the appropriate marginal tax rate.

To avoid a nasty surprise at tax time and depending on their marginal tax rate, drivers should set aside about 20-40% of their Uber income or an amount advised by their accountant.

Need help?

LDB has tax specialists that can help with everything from your ABN and GST registration through to organising your quarterly business activity statements and annual tax returns.

To find out more, phone us on (03) 9875 2900 or send us information via the contact form below.