Ride-share driving and food delivery have become popular gig economy jobs in Australia, offering flexible income opportunities. However, many drivers and delivery workers are unsure about their tax obligations. This comprehensive guide explains when and how you need to pay tax on your earnings from ride-share or food delivery work, the records you should keep, and important tips to ensure compliance with the Australian Taxation Office (ATO).
Are You Considered an Employee or Contractor?
Most ride-share drivers and food delivery workers operate as independent contractors rather than employees. This means you run your own business and are responsible for managing your own tax, superannuation, and business expenses.
Your status affects how you report income and what deductions you can claim. It’s important to understand this distinction to meet your tax responsibilities correctly.
Do You Need to Declare Your Ride-Share or Delivery Income?
Yes. All income you earn from ride-share driving or food delivery must be declared in your tax return. This includes:
- Payments from platforms like Uber, Deliveroo, DoorDash, Menulog, etc.
- Cash tips or additional payments received from customers
- Any bonuses or incentives offered by the platform
The ATO requires you to declare your gross income before deducting expenses.
Taxable Income vs Business Income
As a contractor, your earnings are considered business income. You must:
- Register for an Australian Business Number (ABN)
- Report your business income and expenses in your tax return under the business and professional items section
- Keep accurate records of all income and expenses related to your work
Goods and Services Tax (GST) Obligations
If your annual turnover from ride-share or delivery work exceeds $75,000, you must register for GST. This means:
- Charging 10% GST on your taxable sales
- Lodging Business Activity Statements (BAS) quarterly or monthly
- Claiming GST credits on eligible business expenses
If your turnover is below $75,000, GST registration is optional but can be beneficial in some cases.
What Expenses Can You Claim as Deductions?
You can claim deductions for expenses directly related to earning your income, reducing your taxable income and overall tax payable. Common deductible expenses for ride-share and delivery workers include:
- Vehicle expenses: Fuel, maintenance, registration, insurance, depreciation or lease payments, and parking fees. You can use either the cents-per-kilometre method (up to 5,000 km) or the logbook method to calculate these.
- Mobile phone and data plans: Work-related portion of your bills.
- Costs for equipment: Such as bike or scooter maintenance, delivery bags, or other tools.
- Interest on car loans: Proportion related to business use.
- Other expenses: Work-related clothing or safety gear, tolls, and licensing fees.
Keeping Records
Keeping thorough records is critical to substantiate your income and claims. Recommended records include:
- Invoices and payment summaries from platforms
- Receipts for fuel, repairs, and other expenses
- Odometer readings or logbooks documenting business kilometres
- Bank statements showing income deposits and payments
- Records of any tips or cash payments received
Keep records for at least five years as the ATO may request evidence during audits.
Superannuation for Ride-Share and Delivery Workers
As a contractor, you are generally responsible for managing your own superannuation contributions. However, if you are considered an employee under certain arrangements, your employer may be required to pay superannuation on your behalf.
It’s important to understand your status and plan your retirement savings accordingly.
Lodging Your Tax Return
When it comes time to lodge your tax return, you must include your business income and claim any relevant deductions. Using the ATO’s myTax system or consulting a registered tax agent can help ensure you lodge correctly and maximise your entitlements.
Penalties for Non-Compliance
Failure to declare income or lodge tax returns can result in penalties, interest charges, and audits by the ATO. It’s best to stay compliant by accurately reporting all income and paying any tax owed on time.
Useful Tips for Ride-Share and Delivery Workers
- Register for an ABN early and keep it active.
- Track all business-related expenses and kilometres diligently.
- Set aside money regularly to cover your tax liabilities.
- Consider consulting a tax professional if your tax situation is complex.
- Use the ATO’s online tools and resources designed for gig economy workers.
Conclusion
Ride-share drivers and food delivery workers must pay tax on all income earned and comply with specific business and GST requirements if applicable. Understanding your tax obligations, keeping thorough records, and claiming eligible deductions are key steps to managing your tax affairs effectively. Staying informed and proactive will help you avoid penalties and ensure your gig economy work remains a profitable and sustainable source of income.
