Ride-sourcing is the term given to transporting passengers for a fare through the sharing economy.
A facilitator like Uber or GoCatch connects drivers and passengers, usually through an app or a website. They generally charge a fee or commission for their role in connecting the two parties.
The following are the basics you need to know and do for tax purposes, including:
- keeping records of all your expenses and income (you can use the myDeductions tool in our app)
- apportioning expenses to the time you are providing a ride-sourcing service.
GST – if you have a ride-sourcing enterprise
Calculating tax payable on fares
If a passenger pays a fare of $55 (full fare), you have to:
- pay $5 GST
- declare $50 on your income tax return.
Here's how it's worked out
Calculate GST on the full $55 fare (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 need to include $50 as income in your income tax return – this is the $55 less the $5 GST that you have to pay. The $11 facilitator fee is reduced by $1 GST credits (the GST paid by the facilitator) so you can claim $10 as a tax deduction.
You can claim expenses as long as:
- they're directly related to the running of your ride-sourcing business
- you apportion expenses if they are for both personal and business use
- you keep records (such as receipts), to back up your claims.
Claiming car expenses
You'll probably use your car for both personal and work-related use. This means you need to apportion any car expenses between personal and work-related use.
If your spouse or de facto partner is the owner of the car, the car is considered a joint asset. You can claim deductions for the car in these circumstances.
There are two ways of claiming car expenses, either by:
- the cents per kilometres travelled
- keeping a logbook to calculate the amount of car expenses to claim.
An easy way to record your car expenses is by using the ATO myDeductions tool.
- myDeductions – how to add a vehicle and manage car trips
The cents per kilometre method (point to point)
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. The set rate per business kilometre covers the general running costs of your car including depreciation.
If you use cents per kilometre method, you don't 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 (we may ask you for diary records of work-related trips).
The log book method
Using the log book method you can claim the business-use percentage of car expenses.
- running costs
- decline in value but not capital costs (you can’t claim the purchase price of your car)
- the interest on money borrowed to buy your car
- any repairs.
Expenses don't include capital costs such as the purchase price of your car, the principal on money borrowed to buy your car or any improvement costs.
To work out your business-use, you need to keep a logbook and odometer readings. This logbook must be for a period of at least 12 continuous 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
- an estimate of the expenses based on odometer records showing readings from the start and the end of the period you had the car during the year.
You need written evidence for all other expenses for the car.
Example: 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 application 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 work-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, she needs to take an odometer reading at the time of accepting a job and at the time her ride-sourcing job is completed. She can only count kilometres travelled as work-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 work-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: Travel for income producing 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 as work-related all the kilometres from leaving her home until she gets home three hours later.
If at some point during this time she decided that business was slow and instead met up with friends, she cannot count any further travel as work-related.End of example
What you may be able to claim:
What you can’t claim:
Car expenses you can claim under the logbook method:
Claiming GST credits
GST credits on your business purchases can be claimed, but must be apportioned between your business and private use.
If you use your car 20% for ride-sourcing and 80% for private purposes, and you:
- buy a new car to use for your ride-sourcing activity for $33,000 (including $3,000 GST) – you may claim 20% of the GST or $600 ($3,000 x 20%) pay $110 for fuel (including $10 GST) – you may claim 20% of the GST or $2 ($10 x 20%)
- pay $220 for a service (including $20 GST) – you may claim 20% of the GST or $4 ($20 x 20%).
You may be able to claim an amount of GST credits for other business purchases you make.
More information is available in English – visit ato.gov.au/ridesourcing
You can also contact a registered tax practitioner if you need more help.Earning income by ride-sourcing? Here are the basics.