Designed by PwC Tax Specialists, Airtax does simple tax for individuals from $49. Our integration with Uber allows you to pull earnings and expense data straight from your Uber profile into the BAS, making it super straightforward to stay compliant. Best of all it only takes a couple of minutes! We’re sponsoring this post because we know organising your own tax affairs can be a daunting and expensive task, and we want to help you.
Brace for impact:
Tax can be a painful reality when you’re not ready for it. As a sole trader, it’s important that you stay organised to avoid those nasty surprises and minimise the impact on your cash flow. We have compiled a list of a few useful tips to keep in mind which should help you save money, time and stress whilst operating as an Uber driver. If you’re after more information, check out the rest of our Help Centre which has over 100 tips and tricks that you may find useful.
As you’re probably aware, being a rideshare driver requires that your ABN is registered for GST, and that you report your GST obligations through quarterly BAS. Unlike a PAYG arrangement that you may have had previous experience with as an employee of a company, your GST obligations are not progressively paid to the ATO throughout the period. Rather, you will need to pay GST to the ATO out of the cash you have in your bank account once your BAS is lodged, and sometimes it can be shockingly high. Your quarterly BAS is due to the ATO by the 28th of the following month, after the quarter has finished.
To help ease the potential quarterly sting of GST payments there’s a few things that Airtax suggests you do.
- Set up a separate bank account and contribute a portion of every paycheck into it (around 10% of your Total Fare Amount - before fees). Call this account ‘GST Savings’ and leave it alone until the BAS deadline comes around. This way you should have enough money saved up to settle any GST payable to the ATO, and you might even have some money left over for the next period - turning an unpleasant surprise, into a pleasant surprise! Nobody wants a situation where they’ve already spent the cash that really needs to be paid to the ATO, so it’s critical that you treat a portion of your earnings as though it belongs to the ATO until your BAS is lodged.
- Keep records! This is arguably the most important tax tip anyone will give you. If you can prove that an expense relating to your business activity is subject to GST, you can generally claim the GST back on your BAS. These credits will be used to offset the GST payable on your BAS. It’s a good idea to allocate time each week to organising your receipts into categories, either in a folder or spreadsheet, or perhaps through Quickbooks self-employed. You’ll thank yourself for doing this when tax deadlines come around.
- Note: This is also really important for when it comes time to lodging your annual Income Tax Return.
- Get that business use percentage right. The business use percentage is used to distinguish expenses you have incurred for a business purpose from “personal use” expenses. By keeping a logbook, and tracking the amount of kilometres you travel in your Uber shifts against your total kilometres overall, you’re able to justify the amount of car-related expenses you know you deserve. You only need to complete the logbook over a 3 month period, and once it’s done you have a percentage that you can use for up to 5 years so long as your driving behaviour does not drastically change.To get you started, Airtax has just released an Logbook spreadsheet which you can find alongside a comprehensive set of instructions here
Again, the importance of thinking ahead and being organised is highlighted when Uber drivers come to lodge their annual Income Tax Returns - especially if Uber is your only source of income. Unless you are already making PAYG instalments, you could face a substantial tax payable amount. We suggest you try to forecast how much income you expect to earn from Uber, and think about voluntarily entering into PAYG installments if you anticipate significant (full-time) earnings. This is another measure you can take to minimise the cash-flow shock which can arise from a large income tax payable. You can find out more about voluntary PAYG installment arrangements here
To learn more about doing your tax as a rideshare driver, take a look at our video where we guide you through the basics of how to do your BAS and your income tax return https://help.airtax.com.au/hc/en-us/articles/360000529295