Have you heard?
ATO has written to more than 60,000 Uber and other ride-share drivers, advising them to register for GST.
If you have jumped onto the ride-share bandwagon and are providing 'ride-sourcing' services for a fare such as Uber, Shebah and GoCatch, here are some handy tips to guide you along!
First Things First
If you start to offer ride-share services without tax planning, you could soon find yourself with an ATO tax debt.
Don’t worry! We are here to help!
With just a bit of planning and organisation, you can ensure that you are on-track.
3 main things to note:
Income which you earn from your ride-share activities is assessable income and must be reported in your income tax return.
Deductions can be claimed for expenses that directly relate to providing ride-share services. This applies even if you operate your ride-share activities on a casual basis to supplement your income from another job or other business activities.
Ride-share services are deemed to be taxi travel for GST purposes, so you will have to register for GST regardless of how much you earn from offering ride-share services. The $75K threshold does not apply.
What You Need to Do
Get an Australian business number
Register for GST regardless of how much you earn (ride-share is taxi travel for GST purposes)
Pay GST on the full fare
Only claim GST credits related to transporting passengers for a fare
Lodge business activity statements
Know how to issue a tax invoice (you need to provide one for fares over $82.50 if requested)
Deductions
Deductions can be claimed for the business use proportion of the following:
commissions, licensing or service fees paid to Uber, Shebah, GoCatch or other ride-share facilitators
costs of becoming a ride-share driver after you have started the official application process, such as medical and police checks, application fees etc.
costs associated with business use of car (petrol, servicing, depreciation, etc.)
tolls
parking
vehicle licensing or registration
mobile phone bills
safety equipment (such as high visibility vests)
insurance
tax accountant's fee
bank fees (if you maintain a separate account for your ride-share work)
Non-Deductible Expenses
costs incurred before becoming a ride-share driver, or before the application process starts (such as attending information nights) are not deductible
costs of a normal drivers licence
fines (parking, speeding, etc)
clothing other than safety clothing
meals, drinks, etc purchased whilst on shift
Claiming a Deduction for Business Use of Your Car
There are two ways to claim a deduction for business use of your car:
Cents per kilometre:
Claim deductions of $0.66 per kilometre
This method is only available for distances up to 5,000km. If you cover more than 5,000 business kilometres, the maximum allowable claim is 5,000 km which is $3,300.
This method incorporates all car expenses including petrol, servicing, depreciation/write-off up to $20K, etc. You can make no further claim.
Logbook:
Your claim is based on the business use percentage of each car expense, which is determined by a logbook that must have been kept for a minimum 12-week period.
This logbook must be updated every 5 years.
You can claim all expenses that relate to the operation of the car, at your percentage of business use, as established from your logbook.
The choice of methods can be changed from year to year, depending on which is more favourable to your situation.
Prefer to speak to someone about applying for an ABN, GST registration, preparing your Business Activity Statement or annual tax return? Contact Fortiz Accountants to make an appointment for a discussion.