With an increased demand for more Uber drivers, more individuals are interested in becoming either full-time or part-time drivers. Whether you’re an interested individual or a long-time driver, it’s essential to understand how taxation would be handled for you before submitting your application. As Uber is a popular medium for earning nest egg monies, it’s crucial that you know how the Australian Taxation Office operates with Uber and its drivers. To help you out, here’s a brief guide on how taxes work for Uber drivers.
How Does GST Work for Uber Drivers?
If you do not drive for Uber for more than eight hours per week, or work for the company for less than six months, you are considered an Uber self-employed worker. This means you are responsible for paying Goods and Services Tax (GST) on all of your income.
Uber is required by law to charge its drivers 10% GST, but it passes this extra cost on to its customers. If you exclude your income as an Uber driver when you file your taxes, you cannot get a refund on this GST because Uber is responsible for charging you GST.
At a certain income level, anything above $75,000, Uber drivers must register for business numbers and report their income on their tax returns, to pay taxes. The easiest way to handle taxes for Uber is to open a separate bank account and report your Uber income. If your earnings are less than $75,000, you’ll fall under Division 7A. All of your Uber income will be reported as regular income, which is essential if you want to avoid penalties. You must register your Uber business with the ATO before you start working as a driver.
Are You an Employee or Self-Employed?
You’re considered an employee when you’re in an employment arrangement in which your employer controls when you work and what you do while you work. However, this is not the case with Uber drivers, as they decide when they want to drive and what they want to do while they drive.
Uber considers its drivers “self-employed,” which means they have to pay a higher tax rate than employees. The difference can be pretty significant, as employees pay lower taxes when they start at an organization.
If you earn at least $75,000 as an Uber driver, and you work for more than 20 hours a week or for more than six months, then you’ll need to register for a business number with the ATO. Alternatively, if you earn under $75,000 per year with less than 20 hours of work per week or less than six months of work, you may be considered self-employed by the ATO.
We hope this article proves to be useful when it comes to helping you better understand how GST works for Uber drivers. While things may seem rather confusing at first, the information that we’ve laid out here should be enough to help you get through this entire process. Be sure to keep everything you learned here in mind so that you can avoid penalties that eat into your income.
Are you looking for the best tax software for rideshare drivers? Rideshare Tax is an accountant app for rideshare drivers that assists you in your tax and BAS accounting. It’s a free app designed for rideshare drivers that offer ABN and GST registration and allows you to manage your BAS on the go. Start driving more and worrying less about your money. Be sure to reach out and try it today!