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  • 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. It must be reported in your yearly income 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.

    On this page:

    See also:

    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. When lodging your income tax return:

    • declare the income as business income
    • if your main source of business income is ride-sourcing, type 'Taxi service operation' as your main business or professional activity.

    Next step:

    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 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 whether your expenses were related to business or private use.

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

    • depreciation for assets you own, such as your car (you need to be able to prove ownership)
    • fees or commission charged by the digital platform
    • fuel
    • lease payments for a car
    • parking fees
    • tolls if they were not paid for by the passenger (you may be entitled to claim a GST credit for GST included in the price of the toll).

    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, you first need to 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 had owned it as a private-use car before starting your ride-sourcing activities. You must review your eligibility each year.

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

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    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, including expenses apportioned for both business and private use.

    Example 1: Personal travel and ride-sourcing

    Gina has a job in the city and signed up to be a ride-sourcing driver to earn extra income.

    Gina turns on her app every morning when she drives to work. Some days she's notified of jobs and collects passengers and drops them off before driving to work. Other days, Gina doesn't get any jobs or she rejects them because she doesn't have time.

    On the days Gina doesn't get jobs, she can't count the kilometres travelled as business related even though the app was turned on. The main purpose of the travel is for Gina to get to her main job, which is for a private purpose.

    On days Gina is notified of a job and decides to accept it, her business-related travel starts at the time of accepting a job and finishes at the time her ride-sourcing job is completed. She can only count kilometres travelled as business related when she's driving to collect a passenger and taking them to their destination – these are the kilometres associated with providing the ride-sourcing service and earning income.

    Gina can't count kilometres travelled as business related after dropping the client off and travelling to her main job – she's not travelling between workplaces and the main purpose is travelling to her job, which is private expense.

    End of example

     

    Example 2: Travel for business purpose turns into a personal trip

    It's a Saturday night and Gina's heard that ride-sourcing drivers get a lot of work if they're available. She turns on her app when she leaves her house and drives around the city for three hours and then drives home. Because Gina’s only intention of the trip was for producing ride-sourcing income, she can count all the kilometres from leaving her home until she gets home three hours later as work related.

    If, at some point during this time, she decided that business was slow and met up with friends instead, she can't count any further travel as business related. This is because at that point, the purpose of the travel changed from an business purpose to a personal trip.

    End of example

     

    Example 3: Claiming parking fees

    While running errands, Gina parks her car and incurs parking fees. As the main purpose of the trip is private she can't claim the parking fees, even if her ride-sourcing app was turned on.

    Gina finishes her errands and decides to find some ride-sourcing work, so she drives to the beach in the hope she picks up a fare in the area. To save on fuel, Gina parks the car in the beach parking lot and pays for one-hour parking at a cost of $5. Gina sits in the car with the app on and after 30 minutes is notified and accepts a ride-sourcing job. Because the only reason Gina drove to the beach was with the intent of getting ride-sourcing work and earning income, she can claim the $5 parking fee paid as a deduction.

    End of example

    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.

    If your spouse or de-facto partner is the owner of the car, the car is considered a joint asset and this does not stop you claiming deductions for the car.

    There are two methods to work out car expenses:

    • 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.

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

    See also:

    The cents per kilometre method

    When using the cents per kilometre method, your claim is based 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 but we may ask you to show how you worked out your business kilometres (for example, by producing diary records of ride-sourcing kilometres travelled).

    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, but not 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.

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    Expenses that can't be claimed

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

    • the cost of getting and maintaining a 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.

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    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:

    Last modified: 01 Oct 2019QC 59250