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  • Income tax and ride-sourcing

    The income you earn from your ride-sourcing activities is assessable income and must be reported in your income tax return. This applies even if you operate your ride-sourcing activities on a casual basis to supplement your income from another job or other business activities.

    You can also claim deductions for expenses that directly relate to providing ride-sourcing services.

    As an individual driver you are personally providing the ride-sourcing services to your customers (passengers) through the platform and you have the obligation to declare any income received in your yearly tax return. It is important that you declare the income in your individual tax return and not in another entity such as a company, partnership or trust, even if you operate through such an entity in performing other services for a fee.

    One exception involves fleet hire arrangements undertaken through the platform provider. In such circumstances, the fleet service provider might operate as a company, partnership or trust. The tax treatment of you as the driver in this situation depends on your arrangement with the fleet service provider.

    Example

    Isabella uses her car to drive passengers on weekends that she sources through a ride-sourcing platform (the facilitator). Isabella uses the platform to obtain passengers as an individual. She doesn’t operate through a fleet hire arrangement.

    When it comes time to lodge her income tax return, Isabella will use her personal tax file number (TFN) and declare the income in her individual tax return.

    You can find other examples of ride sharing on ATO communityExternal Link. Read what other people are asking or ask your own question.

    End of example

    Lodging your tax return

    When lodging your income tax return:

    • use your personal tax file number (TFN)
    • declare the income in your individual tax return and not in another entity such as a company, partnership or trust (except for fleet hire arrangements)
    • select the code for your main occupation (if your main source of income is ride-sourcing, use the Business industry code: 46231 – Taxi service operation) .

    See also:

    Income tax deductions

    Expenses incurred in running your ride-sourcing services are deductible. They may include things that relate to maintaining or operating assets used to provide the ride-sourcing services.

    If you claim a GST credit for GST paid on an expense, you can only claim the remaining amount (the total cost less GST) as an income tax deduction.

    Here's how a ride is taxed

    GST

    Calculate GST on the full fare, say, $55 (payments received from passengers include the GST that you have to pay):

    • The GST you need to declare and pay is $5.
    • You receive $44 from the facilitator after they take their fee of $11 from the $55 fare.
    • Some facilitators pay GST on the $11 income they receive – $1. You may be entitled to claim a GST credit. See here.

    Income tax

    You need to include $50 as income in your income tax return – this is $55 less the $5 GST that you have to pay.

    If you are entitled to claim a GST credit for the $1 facilitator fee, you can claim a tax deduction of $10 in your income tax return. However, if you are not entitled to a GST credit for the facilitator fee you can claim $11 as a tax deduction in your income tax return.

    Exclude private expenses

    Expenses can sometimes be part work-related and part private or domestic in nature. You can only claim a GST credit or a deduction for the work-related portion of the expense.

    When claiming a portion of an expense as a work-related deduction you need to be able to show how you calculated the apportionment.

    Common methods of showing how you apportioned expenses include:

    • there are special rules for income tax for working out deductible car expenses
    • using the ATO app's myDeductions tool to record that it's partly for personal use
    • keeping diary entries of specific usage throughout the year
    • claiming expenses from an itemised bill.

    Records can be kept in hard copy or electronically. All records need to be kept for five years following the lodgment of your tax return.

    See also

    Examples

    • If you buy a meal to eat while on a break it's not a work-related deduction; it is a private expense and can't be claimed as an expense.
    • Using the same mobile phone for personal as well as for getting ride-sourcing work means you can claim the work-related portion of phone expenses as a deduction against your income.
    End of example

    Non-commercial losses

    In limited circumstances, for income tax, taxpayers can offset loss activities they undertake against other income they earn like salary and wages.

    If you are carrying on a business, to be eligible to do this, you must meet the income requirement and pass one of four tests.

    If you don't meet these conditions you can't offset your business losses against your other income. Instead you carry forward your business loss to the next year to be offset against your business income from the same or a similar business activity.

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    See also:

    Last modified: 10 Jan 2018QC 52949