How ATO Handles Issues Related To Uber

Uber is a taxi service, according to ATO categorization.  Before many small businesses can be mandated to get registered for GST, they must cross the $75,000 annual income threshold. However, a taxi service-kind of small business is not under this category for GST.  This means taxi services are required to get registered for GST irrespective of the worth of their annual income from the driving business.

Airbnb is always looking for more hosts, while Uber is always on the lookout for more drivers.  What do you stand to gain if you can become a part of this unique economy?

It does not matter if you are operating as a part-time or full –time driver; you are expected to submit to the basic rules of taxation.  This means every dime you earn while working for either of these organizations must be declared to the appropriate authority as income.  You must also be warned that you cannot hide your income from the Australian Tax Office (ATO). They have access to all the bookings data, and they can, therefore, easily match the data to the amount of money flowing through institutions like Airbnb and Uber.

Tax applies to ride sharing services

Uber is a taxi service, according to ATO categorization.  Before many small businesses can be mandated to get registered for GST, they must cross the $75,000 annual income threshold. However, a taxi service-kind of small business is not under this category for GST.  This means taxi services are required to get registered for GST irrespective of the worth of their annual income from the driving business.

You can use your ABN to register for GST provided you already possess individual ABN. The same ABN can also be used for a taxi service like Uber.  It is very easy to claim GST credits as a taxi service provider on the expenses incurred on the vehicle since you already registered for GST. However, you can only have access to just a portion of the credit claim if you are not using the car only for ride-sourcing.

You must keep in mind that you are expected to declare any amount you earn during your taxi driving involvement even if you are just using the car for temporary taxi services. The declaration must be made on your tax return.  You can also win expenses claim against the particular income you have declared if you lease the car being used for the taxi service or you are using the car personally for taxi services.

How to claim car expenses

You can follow several options when you are claiming car expenses.  The available options are highlighted below:

  • You can have access to a cent per kilometer tax deduction if you are driving not up to 5,000 kilometers on business trips in the financial year under consideration. Your allowable deduction is determined by multiplying the kilometers you have traveled during a business trip by 66 cents.
  • Also, you can easily claim car expenses by documenting the business for which you are using the car in a log book for twelve weeks. This way, you can calculate the how long you use the vehicle for business purpose, which will make it easy for you to claim the particular percentage of what vehicle cost as well as other considerations, like repairs, tolls, registration, insurance, fuel, and depreciation.

Never forget to update your log book once in five years.  This is very important since the log book can serve as a very important tax document.  All the business trips you undertake must be recorded in your log book, like the following:

  • The business percentage for the period under consideration in the log book
  • The total number of kilometers you have traveled
  • The odometer reading of the car from the beginning and end of that recording period
  • The starting and ending date for the log book period.

Also, it is important to record the following in the log book:

  • You should record the purpose of the journey
  • You can record two journeys made on the same day as a single journey in your log book
  • You must not forget to add the number of kilometers you traveled
  • Also, include the odometer reading at the beginning and end of the journey
  • Record the time you start and finish the journey

You can easily justify your claim for repairs, insurance and so on if you keep all your receipts you have received in the course of this recording period properly.  You can also use the amount of fuel consumed in determining your claim, along with the odometer reading at the end of each year.