Attention to all UBER drivers, are you really maximizing your deductible expense in the UBER business to save on tax, or are you doing things that put you in danger of losing your entitlement to the largest deductible expense items of your business which is the vehicle related expenses.
The biggest deductible expense for any UBER driver is the vehicle related expenses, which include, fuel, toll, parking, repair, registration, and vehicle insurance. These expense would include the GST and will be used as deductible expense to reduce the taxable income. However, there is one catch, if you are not following the correct procedure, sometime those expenses will not be deductible, and you might end up in paying back the GST which you had claimed, and have no deductible expense to reduce your taxable income.
It is important to note that as an UBER driver, you are not driving a taxi, which is an exempt vehicle under the GST act, and does not require a log book.
As an UBER driver, you will normally drive your family car, and you might keep all of the invoices, but it is necessary to work out the percentage of the vehicle used for the business purpose, and in order to work it out, you would require a valid log book entries to be signed on every entry, and with which must be acceptable to the ATO’s standard.
It is important that you keep your logbook and record it on a continuous basis for 12 weeks, and you need to record down the date of the trip, the event of the trip, the open odometer reading, the end odometer reading, the total kilometre travelled, and then it is important that you signed off on every entries. Failure to comply to any of these condition would mean that the log book will be invalid, and you would lose the claim. The same can happen with accidents claims, when this happen, so having a Queens Uber Lawyer could be helpful in these cases.
The following is an example of the log book method.
Example: Traveling for work
At the end of the income year, Tim’s logbook shows he traveled a total of 11,000 kilometers. 6,600 were for business.
To work out the percentage of car travel used for business purposes, Tim made the following calculation: 6,600 ÷ 11,000 × 100 = 60% of travel was for business purposes.
Tim’s total expenses, including depreciation, are $9,000 for the income year. To work out how much he could claim, Tim completed the following calculation:
$9,000 × 60% = $5,400
The other method of making sure you can claim the vehicle expense without much substantiation is the cents per km, in which you need to record down all of the business related car travel, and at the end of the year, you would be able to claim the total kilometers traveled up to 5000 kilometers multiply by a denominator of 66 cents per km, however, if you use this method, you would not be able to claim any of the GST associated with the vehicle expense. However, if you use this method, you can not claim separately the depreciation expense of the vehicle.
Example: Cents per kilometer method
Jane traveled 3,000 business kilometers during the 2016-17 income year. Jane worked out she could claim $1,980 for her vehicle expenses, as follows:
- 3,000 km × 66 cents per km = $1,980.
At the moment, EndureGo Tax is offering a tax check for all UBER drivers in Sydney for a marginal fee of $10, we will examine your existing tax affair to ensure that you will not get caught with ATO at the time of audit, we will pay emphasis on the the vehicle expense recording mechanism to ensure that it is up to date to keep with the ATO standard, please give us a call on 0410-829-900, or email us at JC@endurego.com to receive this offer.