One of the most common questions we receive from Uber drivers is about how GST on Uber Income and GST on Uber Fees works. To make things even more confusing, Uber have changed their legal structure effective from the 1st of December 2017, which in turn changes the way GST on Uber’s Service Fee is calculated. In this article we’ll explain how the ATO charges GST on your Uber fares and Uber fees.
Uber structure their contracts and service agreements so that for every ride there are two separate transactions:
Of course from your perspective this is all one transaction. Uber make things more convenient for everyone by collecting the fare from the rider on your behalf, deducting their fee automatically, and depositing the net difference into your bank account. But legally, and in the eyes of the ATO, two separate transactions occurred, and this is how it must be declared in your BAS and Tax Return.
Let’s look at these transactions and their GST implications in more detail.
The first transaction is the Fare. This is a transaction directly between you and your rider. It includes all amounts paid by the rider, such as Split Fare Fees, Airport Fees, City Fees and Booking Fees. Even though you pass the Split Fare Fees, City Fees and Booking Fees on to Uber, you still have to declare two separate transactions. You declare the amounts received from the rider as income, and then claim the payment to Uber as a deduction to cancel out the income.
Your income also includes Miscellaneous Payments from Uber, for example referral fees for referring another driver.
Under Australian tax law, Uber drivers are required to be registered for GST. As a GST-registered business owner, you are required to pay 1/11th of your gross income to the ATO as GST. This means you must pay GST on all amounts you receive from your passenger or from Uber.
Here’s an example:
Total Income = $149.60
GST on Income:
Total GST Payable = $13.60
If you read the Uber Service Agreement (see point 2) you’ll see the following (edited for clarity):
The Services (provided by Uber) constitute a technology platform that enables users of Uber’s mobile applications or websites … to arrange and schedule transportation and/or logistics services with … independent third party transportation providers…. You acknowledge that Uber does not provide transportation or logistics services or function as a transportation carrier…
Essentially this means that Uber is just an app/service used by your business. Uber connect you with riders, set the price and collect payment on your behalf, and in exchange they charge you a fee, usually 27.5%. This fee is an expense to your business which you can claim GST and claim a tax deduction for, just like you claim for your fuel or phone bill.
Changes from 1 December 2017
Prior to 1 December 2017, Uber traded through a foreign company. Since they were not an Australian company, they were not registered for GST. This meant they did not charge you GST on their 25% service fee, which in turn meant there was no GST for you to claim back as you didn’t pay any in the first place.
Effective from 1 December 2017 Uber changed to an Australian GST-registered company. This means they now charge GST on top of their 25% service fee (i.e. they charge 27.5%). You can then claim this GST back on your BAS. So from your perspective there is no difference to your out of pocket cost, your net fee after claiming back the GST is still 25%, just as before.
You will also pay to Uber any Split Fare Fees, City Fees (if they apply in your city) and Booking Fees you collected from your rider on Uber’s behalf (they deduct these automatically). You can claim the GST back on these too, just like the Service Fees. As mentioned before, even though they cancel out to zero, we have to declare both sides of this transaction separately, the fee you receive from the rider as income and the payment back to Uber as an expense.
Depending on where you live, you may incur Tolls or Airport Fees as part of giving a ride, which are of course a deductible expense. Uber automatically charges your rider a fee to compensate you, which is income to you (as mentioned above). So again the income and expense cancel each other out, but they still have to be reported separately.
Here is an example of the GST on the various fees and expenses, continued from our example above:
Total Expenses = $36.85
GST on Expenses:
Total GST Claimable = $3.35
Let’s put the above figures together to calculate the Net GST bill for our example:
Net GST Payable = $13.60 – $3.35 = $10.25
Of course you can then also claim the GST on any other business expenses, such as fuel, mobile phone,insurance and etc. to reduce your GST bill further.
As an Uber driver, there are a range of tax deductions you can claim. Here are some work-related expenses that become tax-deductible when you drive for Uber.
In the Logbook method, you can claim all expenses that relate to the operation of the car, at your percentage of business use, as established from your logbook.
The logbook must have been kept for a minimum 12 week period and you must record the date and mileage of your car at the start and end of each shift. You should start your logbook when you leave home and stop when you arrive back home or switch off the app.
Deductions that can be claimed 100% as an Uber expense:
Deductions that can be claimed as per your car business use portion:
Deductions that can be claimed as per Uber use portion:
For further information, you can contact me on 0469 713 134 (Harpreet)