The Australian Tax Office (ATO) waits for no man. So when tax time comes around, you want your ridesharing business tax money sitting safely in the bank, ready to jump into action when the tax office snaps its fingers.
Keep it safe. Keep it separate.
Before you can stash away your Uber driver business tax dollars, you need a place to put them. Make sure that you open a separate rideshare tax bank account—as soon as you read this—if you haven’t already done it.
Whatever you do, don’t keep your Uber driver tax money in with your general ridesharing business income. The temptation to spend it will often prove irresistible.
Then when tax time arrives, you’ll be scrambling to make your tax payment. And we know what that means. Shuffling money from your personal accounts to your business accounts and maxing out those credit cards again. And if you don’t have enough, you could face some nasty legal tax payment penalties.
How much is enough?
How much do you need to put away for your rideshare income tax? If you make a profit from your ridesharing business, you’ll pay tax on the profit. So stash that cash away so you don’t stress at the end of the financial year. We recommend 10-15% if Uber driving is the only way you earn an income. If your Uber partner business is a second job for you, you should hold onto 30 – 40%.
The Tax Office makes the rules
Always remember that the ATO makes the rules, and they can come down like a ton of bricks on people who shirk their income tax payments.
So you need to make sure that you put away those tax dollars in your Uber / Didi / Fab / Taxify / Shebah / HiOscar / SheSafe account BEFORE you do any major spending.
A word or two here about your Uber BAS and GST and how they differ from the tax you pay for your ridesharing business at the end of the financial year.
Each quarter, you’ve been paying the Uber GST you owe on your BAS. We’ve been doing that for you—if you’ve kept your Uber fees and GST up to date.
But the Uber income tax you pay is different. That’s on your total Uber ridesharing business income, minus all your Uber related expenses.
End of year tax time
As you know, we can do your ridesharing business income tax returns and lodge it online for you. Whew! That’s one big thing you can take off your mind.
Because we know the rideshare business inside out, we know all the claims we can make for you. But you have to do your part, too. Remember that your rideshare vehicle logbook is worth its weight in gold, so always keep it up to date. We want to ensure that we can claim every possible income tax deduction for you so you’ll have the maximum amount back for your tax refund. Otherwise, you will be limited to the cents per kilometre method which is capped at 5,000 km’s a year.
Likewise, keep all receipts for your rideshare vehicle, such as fuel, parking expenses, special car cleaning costs, and any mobile charges relating to your Uber use. We’ll ask you for your receipts, so make sure you have them at the ready. More importantly, if the ATO ever wants to view them, you will need to produce them, so please keep them in a safe place.
Supposing you saved more money in your ridesharing business tax bank account than you actually have to pay, once we’ve calculated what you owe the ATO. That means you’ll have some extra money to use—unless you do the practical thing and keep it there to kick off the next financial year ahead of the ball.
Peace of mind
Putting money into your separate ridesharing business tax account on a regular basis is a sure way to be stress-free come tax time. So open that bank account now, start saving—and bring on that peace of mind.