From 1/12/2017, Uber started invoicing as an Australian entity, paying GST to the ATO.
Although this has no effect on your net income for the quarter, it does reduce your weekly income by the GST amount and then give it back to you by a reduced amount owed on your quarterly BAS.
See the post Uber and GST Revisited for full details.
Unfortunately, Uber drivers are liable for GST as was decided in a ruling the ATO published in August 2015. The ruling was challenged in court, with the court upholding the ATO ruling, that Uber was considered “taxi travel” and was subject to the same GST rules as actual taxis. So what does that mean for you as a driver?
Not only do Uber drivers have to pay GST, they have to pay it on the total amount that the passenger pays, not just the amount that Uber transfers to their bank account. In a sense, you are paying Uber's share of the GST as well, because they are not registered as an Australian company.
Firstly, this means that you need to get registered for GST. It’s pretty simple and you can either do it yourself online, or get your tax agent to do it on your behalf. If you don’t already have an ABN, you’ll need one before you can register for GST. You can get an ABN here.
As soon as you have your GST registration sorted, you’ll need to make sure you lodge your
Business Activity Statement (BAS). You’ve got the option to lodge it monthly by the 21st (or following business day if on a weekend) or quarterly by the dates shown below:
Also have a look at our related article How Do Taxes Work for Rideshare Drivers?
Uber BAS Quarterly GST Reporting
|1 - July, August and September
|2 - October, November and December
|3 - January, February and March
|4 - April, May and June
GST is applied to all trips you take, on the whole amount, not just on your earnings, and it is solely your responsibility to ensure it is reported and paid to the ATO. Uber is not an Australian company, so they have no legal obligation to pay GST, meaning you have to pay their share too in a sense.
GST Uber Example
Here’s an example scenario of how GST impacts on your earnings:
Total Fare: $10.00
Uber Fee: $2.50
Earnings After GST: $6.59
Deduct GST for Uber Expenses
When drivers report their rideshare income to the ATO, you also report your expenses for the period, and any GST you’ve paid on those expenses are deducted from the amount of GST you owe to the ATO. That’s another reason it’s important to carefully track your expenses.
Here’s an example:
Sample Monthly Income
Total Sales (this is the full fare plus tolls before Uber’s fees) - $1,000
GST on Sales (1/11th of Total): $90.91
Total Purchases (Your expenses - split between capital and noncapital): $300
GST on Purchases (1/11th of expenses excepting any which did not include GST): $27.27
Amount you Owe (GST on Sales less GST on Purchases): $63.64
What Uber Expenses Can You Claim?
Remember that nearly all your expenses are subject to GST with a couple of exceptions being water, depreciation, some government expenses, and the fees you pay to Uber, so be sure you’re tracking them and keeping receipts, either in an app, or a shoebox, whichever you prefer. For a comprehensive guide on what expenses you should be tracking, Read this Article. If you already track your expenses, and want a better alternative to keeping them in a box, have a look at our review here of some great free and paid options for tracking your expenses.
What Was the Effect of GST on Uber Earnings?
Whilst Uber did increase prices at the introduction of GST, the prices were cut again not long after (after lowering them only weeks before GST as well). Many drivers I’ve spoken to feel that Uber has not been very fair to them with relation to this. They’ve dropped prices, increased prices, and dropped them again all in the span in only a couple of months, which essentially landed drivers making about 20% less than they were before GST came along. Here’s an example of a before and after using a trip in Melbourne which was 10km and 20 minutes long.
|Uber Fee (Assuming 25%)
As you can see, it’s just shy of a 20% drop in earnings, which seems insignificant when looking at one trip, but when you consider that a $1,000 week just became a $800 week for the same amount of effort and with the added responsibility of lodging your BAS and paying the GST, I can see why some drivers see this as a raw deal. Having been saddled with extra costs, I’m confident that most drivers would have expected an increase in fare by at least an amount which would have allowed them to stay on par with what they were already earning. Remember, I did mention that Uber raised the rates to supposedly offset the GST, but this was after they lowered them and ran a big marketing campaign of a rate reduction, meaning many drivers thought they were back to earning what they were, whilst all the while forgetting about the GST.
Ignore GST on Your Uber Earnings at Your Peril
I’ve spoken to a number of drivers about GST, and many have buried their head in the sand thinking Uber would have won the appeal. Others I’ve spoken to just expect they will get away with not paying it. The realities are that Uber has not won the appeal, and we are all liable to pay GST, and anyone who thinks they will get away with it are putting themselves at risk of fines for failing to lodge their BAS and any other possible repercussions that may come with tax evasion as well. One driver I met told me that he has a couple friends who are also drivers who received letters from the ATO telling them they had been found to have been receiving money from Uber which was not being reported. Don’t forget that the ATO can see your bank account, so even though it hurts to do it, lodge your BAS, and pay your GST.