Food delivery services have long been a thing in Australia, but COVID-19 lockdowns accelerated its growth in just a few months. Over 5.5 million Australians aged 14 and up used meal delivery services in 2020 alone. That is 1.6 million more than the 3.9 million recorded in 2019.
For this reason, companies like UberEats, Deliveroo, and Menulog have seen an increase in demand for their service. As such, they also increased their workforce to meet the people’s requests. That means more food delivery drivers need to report their income and lodge their taxes.
Food delivery riders are often treated and paid as contractors. That means paying taxes is solely their responsibility. It can be quite complicated for those who don’t already know how to manage their own taxes.
This article will give you the essential information you have to know as a rideshare or delivery driver.
On Your Assessable Income
The income you are required to report in your tax return and the process in doing so depends on what company you work for. For UberEats and Deliveroo, all income they earn is considered assessable for income tax purposes.
Also, only drivers who earn over $75,000 annually must register for GST (goods and services tax). If you are a food delivery driver and make less than that, you do not need to register for GST. Still, regardless of whether you register for GST or not, you need to be honest and report your income and expenses in your tax returns.
On Services Offered
Some drivers want to make the most of the opportunities they get. So while waiting for food delivery requests, they also serve as drivers on the side. This mixed-income source as a ride-sharing app and a food delivery service is another requirement to register for GST (goods and services tax). GST is a value-added tax of 10 per cent placed across all items sold and consumed in the country.
This additional financial obligation applies to all the types of businesses you own. Therefore, if you are an Uber driver and an UberEats delivery driver, you need to pay for your GST obligations for both services. If you register yourself for GST, it is your responsibility to collect the extra money from your customers and use it to pay your taxes when it is due.
How Contractual Food Delivery Drivers Lodge Their Tax Return
If you are a food delivery driver who secures income from other sources, you must declare all income on your tax return. As mentioned, the ATO would require you to pay for 10 percent of each income source, which could be a heavy payment to some. If you want to still save from significant tax payments, make sure that you keep at least 30 percent of your total income. That way, you can avoid penalties and fines.
What You Can Claim
Like entrepreneurs and self-employed people, you also have the chance to claim tax deductions. Here are some items you are allowed to deduct:
- Parking fee
- Toll fee
- Mobile phone bills
- Car-related expenses
- Safety equipment investments
- Vehicle licensing, registration, and renewal
- Licensing or service fees paid to your food delivery platform
- Cleaning and maintenance fee
- PPE (personal protective equipment)
- Accountant fee
Any expenses related to your service can be filed to lower your tax estimate. However, you cannot reimburse other costs like driving or parking fines, regular clothes, food and drinks, or fees involved in acquiring your driver’s license. Make sure that you have complete official receipts and other proof of expenses so you can claim them without a problem.
Filing your taxes independently as a contractor rideshare driver is not always easy in the beginning. You have to make sure you understand your responsibilities and remain transparent to the ATO to avoid any form of penalty later. At the same time, you need to accurately report your income and expenses to make sure that you are not committing any violations.
Beginners and busy people are more prone to making mistakes. The best you can do is download the best tax software for rideshare drivers instead of managing on your own. Rideshare Tax is a free app designed for this purpose. We provide free GST and ABN registration and help you manage your rideshare business easily in just a few taps. Download the app now!