Income and deductions for ride-sourcing

The income you earn from ride-sourcing is assessable income. This includes fares, tips or bonuses from the digital platform. You must report it in your annual tax return. This applies even if you're providing ride-sourcing services on a casual basis to supplement your income from another job or other business activities.

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

Lodging your tax return

You need to lodge a tax return regardless of how much you earn from providing ride-sourcing services because you are operating a business. Lodge the tax return for individuals, including the supplementary section and the business and professional items schedule.

The fastest way to lodge is through myTax or a registered tax agent.

If you use myTax:

• declare the income as business income by selecting  
  • you were a sole trader or had business income or losses, partnership trust distribution (not from a managed fund)
  • business/sole trader income or loss
  • business income or loss.
   
• type 'Taxi service operation (owner operator)' as your main business or professional activity if your main source of business income is ride-sourcing.

Next step:

• Income tax return

Claiming deductions

Expenses you incur while providing ride-sourcing services are deductible. This can include costs related to maintaining or operating assets, such as a car or mobile device.

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

Expenses can sometimes be part business and part private use. You can only claim a deduction for the business portion of the expense – this is called apportionment. You need to show how you calculated the business and private use of your expenses.

Some examples of expenses you may be able to claim, if you incurred them while providing ride-sourcing services, include:

• depreciation for assets you own, such as your car (you may need to be able to prove ownership)
• fees or commission charged by the digital platform
• fuel
• lease payments for a car
• parking fees
• bottled water, mints, tissues, and newspapers that are provided for the use of passengers
• wipes, sanitisers and anti-bacterial spray provided for passengers and used to clean your vehicle
• tolls if the passenger didn't pay for them (you may be entitled to claim a GST credit for GST included in the price of the toll)
• state or territory commercial licences and approvals such as
  • driver accreditation, driver registration and application fees, medical tests and police checks. Note: The costs of getting and maintaining a private driver licence is considered a private expense and is not deductible.
   
• tax agent fees and payments for similar services.

There are special rules for working out deductible car expenses.

You may be eligible for a range of concessions if you're a small business entity, such as the instant asset write-off. To work out if you are eligible, first work out if you are a small business entity in an income year. You cannot claim an instant asset write off for your car if you owned it as a private-use car before starting your ride-sourcing activities. You must review your eligibility each year.

You can keep records for deductions in hard copy or electronically. Keep all records for five years following the lodgment of your tax return.

See also:

• Deductions
• Depreciation and capital allowances and expenses
• Concessions at a glance
• GST credits and income tax deductions
• myDeductions

Working out the business/private portion of an expense

When claiming a portion of an expense as a business-related deduction, you need to be able to show how you calculated the business-related amount. This is known as apportionment.

Common ways to show how you apportioned expenses include:

• keeping diary entries of specific usage throughout the year
• claiming expenses from an itemised bill.

You can use the myDeductions tool in the ATO app to record your expenses. This includes expenses apportioned for both business and private use.

Calculating car expenses

You'll likely use your car for ride-sourcing services and personal use, which means you need to apportion any car expenses.

There are two methods to work out car expenses for sole traders:

• cents per kilometres travelled
• keeping a logbook to calculate the amount of car expenses claimed.

When choosing a method, you:

• can use our work-related car expenses calculator to work out which method gives you the best result
• can use different methods for different vehicles
• can change methods from year to year
• must keep appropriate records.

These methods can only be used to claim expenses for a car you owned or leased. You are treated as the owner if you held the car under a hire purchase agreement.

You cannot claim a deduction for ownership expenses relating to a car owned or leased by someone else, including your employer or another member of your family. However, we consider you to be the owner or lessee of a car and eligible to claim expenses where a family or private arrangement made you the owner or lessee even though you were not the registered owner. For example, you can claim for a car that was given to you by another member of your family and which, although it was not registered in your name, you had permission to use, or deal with, as your own and for which you paid all expenses including registration and any insurance.

If you use someone else's car for ride sourcing purposes, such as borrowing a friend or family member's car, and you do not have permission to use, or deal with, the car as your own, you will only be able to claim the direct costs (such as fuel) that you paid as a deduction. You will not be able to claim the costs of ownership such as depreciation.

The easiest way to track your car expenses is by using the ATO app's myDeductions tool.

See also:

• myDeductions – Add your trips
• Work-related car expenses calculator

The cents per kilometre method

When using the cents per kilometre method, you base your claim on a set rate for each business kilometre. You can claim up to a maximum of 5,000 business kilometres per car per income year. The set rate per business kilometre covers the general running costs of your car including depreciation, fuel, servicing and insurance, so you don't claim deductions for these expenses separately.

If you use the cents per kilometre method, you do not need written evidence to show how many kilometres you have travelled. However, we may ask you to show how you worked out your business kilometres (for example, by producing diary records of ride-sourcing kilometres travelled).

Where you and another joint owner use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 kilometres.

Note: If you use the cents per kilometre method, you can't make a separate claim for depreciation of the car’s value.

The logbook method

When using the logbook method, you can claim the business-use percentage of car expenses.

Expenses include running costs, depreciation and interest. It does not include capital costs such as the purchase price of your car or an amount borrowed to buy it.

To work out your business-use portion, you need a logbook and the odometer readings for the logbook period, which is a minimum continuous period of 12 weeks.

Each logbook you keep is valid for five years, but you may start a new logbook at any time. If you establish your business-use percentage using a logbook from an earlier year, you must keep that logbook and maintain odometer readings in the following years.

You can claim fuel and oil costs based on either your actual expenditure or you can estimate the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.

You need written evidence for all other car expenses.

See also:

• Cents per kilometre method
• Logbook method
• Motor vehicle expenses

Expenses you can't claim

There are some expenses you can't claim because they're personal expenses or not allowed under the law. This includes things like:

• the cost of getting and maintaining a private driver licence
• fines, for example speeding or parking fines
• fuel tax credits
• personal or private expenses, such as meals you purchase while on a break, or the private use of a car used for ride-sourcing activities.

See also:

• Fuel tax credits

Non-commercial losses

As a ride-sourcing driver carrying on a business, there are restrictions on your ability to use a yearly loss from your ride-sourcing business against other income. It would be considered unusual for ride-sourcing drivers to have deductions greater than their income for a tax year. In these circumstances, you would need to consider the non-commercial loss rules.

See also:

• Non-commercial losses
• Losses

All money earned from ride-sourcing activities is assessable income and must be reported in your tax return.