Uber is such an easy, flexible opportunity to make some money on the side that it is tempting to jump in, start earning and leave finances for later. But tax time will inevitably come, and it will be less stressful if you plan for it from the start.
Get an Australian Business Number (ABN) and register for Goods and Services Tax (GST)
If you are an Uber driver, you are not an Uber employee; you are running your own business, which you need to register. You are also required to pay a Goods and Services Tax (GST). You may have heard that businesses do not need to register for GST until they have a turnover of $75,000 or more. Unfortunately, this does not apply to Uber drivers. Even if you are driving very occasionally and only making a small amount of money, you still have to pay GST on your earnings. Uber challenged this ruling in court, but they lost the case, and Uber drivers will continue to pay this tax. On the bright side, you can claim back GST on all your Uber-related expenses, such as petrol, water and extras that you may be providing for your passengers.
You can register for GST at the same time you are obtaining an ABN or you can contact your accountant to do it on your behalf.
Save a part of your Uber income for tax
In addition to GST, you will also need to pay income tax on your Uber earnings. Your profit from Uber (income after expenses) will be added to your income from other sources, such as your day job or other business ventures. Your total taxable income will determine your tax bracket. Once you earn more than the tax-free threshold, you will be paying 19-45% tax. You will be able to meet any tax obligations much easier, if you have been putting away of portion of your earnings from day one.
Keep track of your expenses
If you wait until tax time to think about your expenses, you might miss opportunities to get tax deductions. Talk to an accountant when you are first starting and get advice on what type of expenses to claim, which receipts to keep, whether you need to maintain a driving log and how to organise all the paperwork. Your accountant may give you spreadsheets to fill out as you go so that you are prepared when it comes to filing your business activity statements (BAS) and tax return.
Share6 March 2017
Hi, everyone. Nancy here. I am currently studying for my degree in mathematics. As part of the “maths in the workplace” component of my degree, I am doing an internship with an auditing firm. Of course, getting to apply maths in a practical setting has been an absolute joy, but there have been a number of frustrations too. It has been a real eye-opener to see how many businesses have a haphazard approach to accounting and book-keeping. One of the jobs the auditing firm undertakes is to recommend improved accounting practices. A number of businesses which have hired professional accountants since the last audit have definitely thrived! I hope this blog captures the beauty of applying mathematical principles to business and using tried and true accounting methods. I trust my entries add up properly to give you an equal share of information and inspiration. Thank you.