The Relationship Between GST and Ridesharing (Uber)
Did you know that as an Uber, Didi, Ola or other ridesharing service driver you must be registered for GST? This means that you will have many extra tax obligations beyond your standard income tax return. Ridesharing can be great for making extra cash, but it is important that all drivers are aware of what obligations they must fulfil.
To help current and future ridesharing drivers we have created this overview to the GST obligations drivers must fulfil. If you have any questions, feel free to contact GST register right away.
Doesn’t my ridesharing service pay GST for me?
As you are not an employee of your ride sharing company, they are not obligated to pay tax on your behalf. Instead, you need to take responsibility over all GST and income tax obligations you may have. On top of this, there could be other taxes that you need to pay as well. Once you register for GST, we recommend you to contact an accountant. Your accountant will also be able to advise you on how to properly set-up your accounts and could even help you automate some of the taxation process.
How do I get started?
First step after registering for an ABN is to register for GST. You can do this easily at GSTregister.com.au. Simply fill out our simple form, ensure that you have your ABN nearby, and hit submit. As a registered agent with the ATO, we will be able to review your submission, ensure that you completed it correctly, before being processed for GST registration. You could be registered and ready to go in as little as 24 business hours.
I am registered for GST, now what?
Now you can begin operating as a ridesharing driver. Generally, service operators like Uber, Didi, or Ola will automatically add GST into the fare. However, you will need to ensure that you calculate how much GST you should be collecting from each fare and set this money aside. GST is calculated as 1/11th of the fare. This means that if the fare was $110, the GST component of that fare is $10.
You will also now need to lodge a BAS on a quarterly basis. This is where you declare the GST you collected while operating as a driver (and any expenses you incurred related directly to the business). When you lodge your BAS, you will also have to pay the GST you collected to the ATO. It is important not to forget to lodge your BAS as you may be hit with fines and extra interest on repayments. If you have any questions about BAS contact GSTregister.com.au.
What about tips?
Tips form a part of your assessable income and so, should be declared. You are also obligated to collect GST on tips that you earned as a result of providing a ridesharing service. If you need further advice about tips and your tax obligations talk to your accountant.
Is GST applied to the service fee?
GST is applied to the service fee that is collected from the fare. However, one of the advantages of being GST registered is that you will be able to claim that GST back as an input credit. This input credit will ultimately reduce the GST that you are liable to pay to the ATO.
It is important that you register for GST before you begin driving passengers. You will need to understand all of your tax obligations to ensure that there are no surprises when you lodge your BAS and income report. If you have any questions regarding GST contact GSTregister.com.au today.