1. The Two Golden Rules: ABN and GST Registration

Before you accept your first passenger, there are two non-negotiable steps every rideshare driver in Australia must take.

A) Get an Australian Business Number (ABN)

As a rideshare driver, you are an independent contractor, not an employee. Therefore, you must have an ABN for Uber drivers and other platforms. An ABN identifies your business to the government and is essential for all your tax dealings. Applying for one is free and can be done online.

B) Register for Goods and Services Tax (GST)

This is the single most important and often misunderstood rule. The ATO has specific regulations for the taxi and rideshare industry. Unlike other small businesses that only need to register for GST if their annual turnover is $75,000 or more, rideshare drivers must register for GST from the very first dollar they earn. There is no threshold. This means from day one, you are required to:

• Charge GST on your full fare (which is included in the price the passenger pays).
• Pay this GST to the ATO.
• Lodge regular Business Activity Statements (BAS).

Failure to register for GST can result in significant back-payments and penalties. It's crucial to get this right from the beginning.

2. Understanding Your Income and GST Obligations

When you drive for a rideshare service, the gross fare paid by the passenger includes 10% GST. Your responsibility is to report this GST to the ATO via your quarterly or monthly BAS. Here’s a simple breakdown:

• Gross Fare: The total amount the passenger pays
• GST on Fare: 1/11th of the gross fare. This portion belongs to the ATO.
• Rideshare Platform's Fee: The platform will deduct their service fee from the gross fare.
• Your Net Income: The amount left over after the platform's fee and GST are accounted for.

On your BAS, you will declare the GST collected on your fares and claim GST credits on your business-related expenses (like fuel and insurance). The difference is what you pay to or get refunded from the ATO.

3. Maximising Your Deductions: What You Can Claim

The key to reducing your taxable income is to claim every legitimate business expense. For a rideshare driver, your car is your biggest asset and your biggest source of deductions.

Calculating Car Expenses: Logbook vs. Cents Per Kilometre

You have two methods to claim your car expenses.

A.) The Logbook Method (Highly Recommended for Rideshare Drivers)

This method almost always results in a larger deduction for drivers. It involves calculating the business-use percentage of your car.

• Keep a Logbook: You must keep a detailed logbook for 12 continuous weeks, recording all trips (both business and private).
• Calculate Percentage: From the logbook, you work out what percentage of your car's travel is for rideshare purposes.
• Claim Your Percentage: You can then claim that business-use percentage of all your car's running costs for the year.

A valid logbook lasts for five years, provided your driving patterns don't significantly change.

B.) The Cents Per Kilometre Method

This method is simpler but often less effective for rideshare drivers.

• For the 2024-2025 financial year, the rate is 88 cents per kilometre.
• You can claim a maximum of 5,000 business kilometres per car, per year.
• This method is all-inclusive, meaning you cannot separately claim expenses like fuel, insurance, or servicing.

Given that most full-time drivers will far exceed 5,000 business kilometres, the logbook method is usually the superior choice.

4. Your Rideshare Deduction Checklist

Beyond the direct car running costs claimable with the logbook method, don't forget these common rideshare tax deductions:

• Vehicle Expenses (with a logbook):
  • Fuel and oil
  • Registration and insurance
  • Repairs, servicing, and new tyres
  • Car cleaning and car washes
  • Depreciation (decline in value) of your car
  • Interest on your car loan

• Rideshare-Specific Costs:
  • Rideshare platform service fees and commissions.
  • Licensing, background check, and accreditation fees.

• Other Essential Expenses:
  • Mobile phone bills: The work-related portion of your plan.
  • Passenger amenities: Bottled water, mints, tissues, etc.
  • Tolls and parking fees incurred while on a trip or waiting for a fare.
  • Stationery and logbooks.
  • Safety equipment such as dash cams or first aid kits.
  • Music streaming service fees for your passengers' enjoyment.
  • Bank fees if you have a dedicated business account.
  • Accountant's fees: The cost of having a professional like Tax Savers manage your tax affairs is deductible!

What you cannot claim: Fines (like speeding or parking tickets), personal expenses (like meals or coffee purchased on a break), and the cost of your standard driver's licence.

5. Let Tax Savers Guide You

The tax rules for rideshare drivers are unique and more complex than for a standard employee. Managing your ABN, GST, BAS lodgements, and detailed record-keeping can quickly become overwhelming.

At Tax Savers in Tarneit, we specialise in helping sole traders and rideshare drivers navigate their tax obligations with confidence. We can help you:

• Set up your ABN and GST registration correctly from the start.
• Manage your quarterly or monthly BAS lodgements.
• Advise on the best record-keeping methods.
• Ensure your logbook is compliant and you are maximising your deductions.
• Prepare and lodge your annual income tax return accurately and on time.

Focus on the road and providing great service to your passengers. Let a professional Tarneit accountant handle the complexities of your tax.

Driving for a rideshare service? Get your tax in the right lane.

Contact the friendly and experienced team at Tax Savers today for a consultation.

Call Tax Savers on 0387210365 or visit our website at taxsavers.com.au to book your appointment. We'll help you drive your business forward, tax-compliantly.