# Tax obligations



## Bigdog65 (Mar 29, 2016)

Hello everyone. 

I'm considering becoming a driver but am trying to work out what I'm likely to end up with after tax. From reading a lot of other posts here, I garner the following:

Suppose your fare is 22 dollars:

You have to pay gst, commission & I come tax - however in what order and in what amounts?

Ie: is my 1/11th of the fare calculated before I pay the commission or after? 

If before, wouldn't it be fare that uber pays 20% of the gst? 

Also, with normal income tax, do I pay income tax on income pre gst or post? 

Also can I claim the 20% as a deduction? 

Also if I buy / lease a car for the purpose can I claim that cost as a deduction? @@

Thanks all for reading rambling question. 

Note: it seems I can't edit text without back spacing.. Thus the 22 dollar figure was never used:/


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## PartnerPeople (Feb 20, 2016)

pay gst, commission & Income tax GST first (1/11th of gross fares, surge & tolls), then deduct Uber's commission, factor in your expenses, then calculate income tax. If you already have a first job, then combine your net Uber amount (what's left over) with your day job, then go to https://www.ato.gov.au/Calculators-...lator/Individual-Non-business-Calculator.aspx and calculate your total tax payable.
Tax payable, less what your employer has paid = how much you need to set aside

is my 1/11th of the fare calculated before I pay the commission or after Before

If before, wouldn't it be fare that uber pays 20% of the gst It would be *fair*, but Uber is providing its services from a foreign country and isn't registered for GST.

with normal income tax, do I pay income tax on income pre gst or post: Post

Also can I claim the 20% as a deduction: You claim it as an expense (calculate GST first, on sales and expenses) and then you calculate the net amounts.
Income Excluding gst and expenses excluding gst, what is left over is your taxable income (which includes Uber's fee as an expense)

Also if I buy / lease a car for the purpose can I claim that cost as a deduction? Only proportional to the Uber use off the vehicle (you work this out by keeping a log book of mileage)

Thanks all for reading rambling question You're welcome

The other option is to let Partner People handle your Uber income.

Check out this old example report of someone earnings $2000 in a week. Found here
The $914.58 becomes the gross income and income tax is deducted from this.


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## UXDriver (May 20, 2015)

6 to 25 an hour in your pocket


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## Bigdog65 (Mar 29, 2016)

: work cover & super - would I be obliged to pay those if I only doing part time? 

re gst: s 9.40. Of the gst thingy says that:
You must pay the GST payable on any * taxable supply that you make. 
Wouldn't it be more logical to think that uber made the taxable supply to the consumer, whereas the driver made a separate taxable supply to uber ( or as an employee / earner is not liable to pay ), while the uber driver may be required to register for gst, they are indeed not liable to pay gst. 

If it was the driver making the taxable supply then he or she would receive the money and then pay the commission to uber in a separate transaction. 

Also I note a need for consideration.... Consideration passes from uber to me,it is not from the passenger to me. Uber hires me on a per ride basis, it is not the passenger hiring me. 

There are indeed two seperate contractual arrangements in place, this is evidenced by the fact that uber will still pay me if the passenger's card bounces, minimum fare promos, free ride promos etc. 

Thoughts ? I'm thinking of driving, registering for gst but not paying it.


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## MyRedUber (Dec 28, 2015)

Legally:
a) The payment of the fare plus surge plus tolls plus any extras, or the cancellation fee, is between the passenger any the driver. Uber merely collect that payment on the driver's behalf and pass it on to the driver. The driver's GST liability is calculated on that total fare plus surge plus tolls plus any extras, or the cancellation fee.
b) The payment of the commission is between the driver and Uber. Because Uber is not an Australian company, they do not collect GST on that payment.
c) These two transactions are quite separate.



Bigdog65 said:


> I'm thinking of driving, registering for gst but not paying it.


The ATO have access to your bank accounts. If they see payments from Uber and you haven't been sending the GST you've collected, they'll start asking questions. You could find yourself with a large fine.


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## MyRedUber (Dec 28, 2015)

Bigdog65 said:


> Uber hires me on a per ride basis, it is not the passenger hiring me.


No. Quite the opposite.


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## UberDriverAU (Nov 4, 2015)

Bigdog65 said:


> Uber hires me on a per ride basis, it is not the passenger hiring me.





MyRedUber said:


> No. Quite the opposite.


At the rate that Uber pisses drivers off, I think that's likely to tested in court at some stage. It's only gonna take one person who's pissed off enough to start a class action, and then we'll see many many other drivers jump on board. Much like we're seeing in California atm.


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## UberDriverAU (Nov 4, 2015)

Bigdog65 said:


> Hello everyone.
> 
> I'm considering becoming a driver but am trying to work out what I'm likely to end up with after tax. From reading a lot of other posts here, I garner the following:
> 
> ...


There are a few details that need to be known before you can determine whether or not it's worthwhile driving for Uber:

(1) Do you currently have a job, and will Uber be supplemental income? If yes, what is your current tax bracket? (Check here)
(2) What car will you use to drive for Uber, and what is it's current value?
(3) Will you own this car outright, or will you finance it?

Without knowing these details, it's simply not possible to figure out what you will be keeping after all expenses and taxes are accounted for.


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## UberDriverAU (Nov 4, 2015)

Bigdog65 said:


> re gst: s 9.40. Of the gst thingy says that:
> You must pay the GST payable on any * taxable supply that you make.
> Wouldn't it be more logical to think that uber made the taxable supply to the consumer, whereas the driver made a separate taxable supply to uber ( or as an employee / earner is not liable to pay ), while the uber driver may be required to register for gst, they are indeed not liable to pay gst.
> 
> ...


My advice to you is to forget logic (for the moment). As things are currently interpreted by the ATO, it is you who is making the taxable supply because the passenger hops in your car and you are driving it. All you need to know regarding GST for now, is that you must be registered, and it is you that must pay it. If you don't pay up, the ATO will be chasing after you, and not someone else.


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## PartnerPeople (Feb 20, 2016)

Bigdog65 said:


> work cover & super - would I be obliged to pay those if I only doing part time?


Super: Yes, unless you're over 70
Workcover: it is charged at a proportional (varies per state) rate to your income, not to your hours work. Short answer is yes, because you're still at risk of a workplace injury even if you're only working 1 hour per week.


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## UberDriverAU (Nov 4, 2015)

Bigdog65 said:


> : work cover & super - would I be obliged to pay those if I only doing part time?





PartnerPeople said:


> Super: Yes, unless you're over 70
> Workcover: it is charged at a proportional (varies per state) rate to your income, not to your hours work. Short answer is yes, because you're still at risk of a workplace injury even if you're only working 1 hour per week.


Why would that be a yes? Uber drivers, if they are correctly classified as independent contractors, are not obliged to pay either.


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## PartnerPeople (Feb 20, 2016)

Doing it solo: then no, workcover and super are not mandatory
Doing it through us: then yes. Both are mandatory


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## UberDriverAU (Nov 4, 2015)

Perhaps the focus for the moment should be on determining whether it's going to be a viable enterprise, rather than the finer details of super, work cover, etc. That seems to be the intent of the O.P., figuring out what he'll be left with once all expenses and taxes are paid. If it's not viable going it alone, it obviously can't be more viable by using Partner People because additional amounts (super, work cover, fees, etc) are taken from your gross revenue.


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## PartnerPeople (Feb 20, 2016)

I would disagree. 
With the sample report above, although it doesn't show income tax, it does give a good indication of what you end up with compared to the 'gross fares' figure from Uber.
Super really is cost neutral as it is contributed to your chosen fund.
Workcover is only around 2-4% of gross wage (after all other calculations) and this serves to protect you financially in the even of an injury. So if you cover your car against damage, it would seem logical you'd want personal injury protection as well.
Our fee: well if you don't know the basics of GST accounting then you would probably go see an accountant right? And you would need to put aside enough to cover your tax bill. 
Our method is weekly based. If you don't earn, you don't pay. What gets paid to you is yours to keep. GST and Income tax is withheld, leaving one with only a net wage and a payslip.


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## UberDriverAU (Nov 4, 2015)

Ok, let's go through some options and things to consider. This is probably what any driver should do anyway I guess.

_Questions_
(1) Does Partner People have to pay Payroll Tax? Current rates are around 5% and thresholds vary between states. If so, obviously this would need to come out of driver revenue. This obviously isn't a cost that an independent contractor has to pay.
(2) What is a reasonable figure for accounting fees? I do all of this myself, so don't have to worry about them.

_Assumptions_
(1) Fares: $550/week, $28,600/year.
(2) Uber Fees: $110/week, $5,720/year, 20% of fares.
(3) GST: $50/week, $2,600/year, 9.09% of fares.
(4) Partner People's fee: $12 per week, or $624 per year, 2.2% of fares.

_Worker's Compensation & Alternatives_
(1) Using PP, Workers Comp (if rates are 2%-4%): $7.41-$14.54/week, $385-$756/year, 1.3%-2.7% of fares. Covered only whilst working.
(2) Accidental Injury Insurance: $3.84-$7.67/week, $200-$400/year, 0.7%-1.4% of fares. Covered 24 x 7, even if overseas.
(3) Income Protection Insurance: You can have this covered through your super fund, so there are no cash flow impacts. Covered if you can't work, regardless of when injured, etc.

_Superannuation_
(1) Using PP, Superannuation: ~$32/week, ~$1,664/year, ~6.4% of fares.
(2) Even if you are an independent contractor, you can still choose to make contributions into your super fund.
(3) Whilst super is indeed still your money and cost neutral, it still reduces the cash flowing into your bank account. This may not be desirable to a driver if Uber is being used for supplemental income, because there are already super contributions being made from their main job.

_Things to Consider_
(1) Depreciation. This is the biggest hidden cost of driving for Uber. If you drive an expensive car, then you're pretty much guaranteed to make a loss.
(2) Repairs.
(3) Increased servicing and maintenance costs.
(4) Additional costs for "ride share" car insurance.
(5) Additional costs for "ride share" CTP insurance.
(6) Licencing fees for providing a "carrying passengers for reward" service.
(7) Costs for water and mints (if you're silly enough to offer these).
(8) Roadside assistance.

Whilst I do think PartnerPeople does offer a useful service to a lot of drivers, you can't change the underlying economics in a significant way. If someone isn't driving an appropriate car, PartnerPeople simply can't turn a loss maker into a profit maker.


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## MyRedUber (Dec 28, 2015)

UberDriverAU said:


> Why would that be a yes? Uber drivers, if they are correctly classified as independent contractors, are not obliged to pay either.


If you use the services of PartnerPeople, you become an employee of PP. PP have obligations for Super, Workcover and Income Tax, as well as GST.
You're not just handing over your responsibilities for an ABN and GST to PP.


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## UberDriverAU (Nov 4, 2015)

MyRedUber said:


> If you use the services of PartnerPeople, you become an employee of PP. PP have obligations for Super, Workcover and Income Tax, as well as GST.
> You're not just handing over your responsibilities for an ABN and GST to PP.


Yes, I understand that. The O.P. didn't frame his question as "I'm thinking of using PP ...", and the reply wasn't framed as "If you use PP ...", so it came across as a general statement, rather than PP specific one. That was subsequently clarified, so all good.


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## MyRedUber (Dec 28, 2015)

The thread had turned to the question of using PP to avoid all the hassles, and why would they have to contribute to super, workcover, etc...


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## UberDriverAU (Nov 4, 2015)

MyRedUber said:


> The thread had turned to the question of using PP to avoid all the hassles, and why would they have to contribute to super, workcover, etc...


Well no, not really. The OP's last post clearly doesn't acknowledge PartnerPeople's first post.

Anyway, the question of how much he'll have left after expenses and taxes can't be answered until such times as we know further details from him. If he's going to make a loss, it doesn't matter whether he uses PP or not, it still wouldn't be worth doing. A hassle free loss, is still a loss.


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## Goethite (Mar 29, 2016)

On the Australian Government 'Australian Business Register' site it states that "GST registration is required if your turnover is $75,000 or more". I'm certainly not achieved anywhere near that 'turnover' despite working over 55 hrs per week, with Uber as my sole source of income ... so am I better off not registering for GST at all and not worrying about it or doing BAS etc ? Sorry if this is a dumb question ... reading above I get the impression that paying GST is a given for drivers!?


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## UberDriverAU (Nov 4, 2015)

Goethite said:


> On the Australian Government 'Australian Business Register' site it states that "GST registration is required if your turnover is $75,000 or more". I'm certainly not achieved anywhere near that 'turnover' despite working over 55 hrs per week, with Uber as my sole source of income ... so am I better off not registering for GST at all and not worrying about it or doing BAS etc ? Sorry if this is a dumb question ... reading above I get the impression that paying GST is a given for drivers!?


The ATO considers the services you provide to be "taxi travel". In this case, you need to be registered for GST regardless of your turnover.


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## MyRedUber (Dec 28, 2015)

Goethite said:


> On the Australian Government 'Australian Business Register' site it states that "GST registration is required if your turnover is $75,000 or more". I'm certainly not achieved anywhere near that 'turnover' despite working over 55 hrs per week, with Uber as my sole source of income ... so am I better off not registering for GST at all and not worrying about it or doing BAS etc ? Sorry if this is a dumb question ... reading above I get the impression that paying GST is a given for drivers!?


All taxi drivers, almost all hire drivers, and all UberX drivers, must collect GST from the first $. The $75K minimum does not apply to anyone providing "taxi services".


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## nickl (Mar 19, 2016)

I have driven for 8 weeks and made less than $5k. I registered for GST, but i have decided i'm not going to bother.

This financial year i have made less than 60k from uber and my previous job.

Will the ATO come after me? or am i safe?
I will still do my income tax, i just cant be bothered working out GST and doing a BAS.


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## UberDriverAU (Nov 4, 2015)

nickl said:


> I have driven for 8 weeks and made less than $5k. I registered for GST, but i have decided i'm not going to bother.
> 
> This financial year i have made less than 60k from uber and my previous job.
> 
> ...


You are an easy target for the ATO. Yes, they will come after you. After you've been fined, I think you'll then say "I wish I had been bothered".


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## nickl (Mar 19, 2016)

But arent i under the threshold?


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## nickl (Mar 19, 2016)

Also, I can show that in the end I made a loss after 6 weeks of Uber driving. With car repayments etc. I know this is more to do with income tax than GST, but when is there ever a case where I dont have to pass on the GST due to my poor business preformance?? ie. is there any way of getting out of paying GST if I have made insignificant amounts? (lol me)


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## Instyle (Oct 18, 2014)

nickl said:


> But arent i under the threshold?


There is no threshold when providing "Taxi-travel" services, GST payable from first $1 not $75k.



nickl said:


> Also, I can show that in the end I made a loss after 6 weeks of Uber driving. With car repayments etc. I know this is more to do with income tax than GST, but when is there ever a case where I dont have to pass on the GST due to my poor business preformance?? ie. is there any way of getting out of paying GST if I have made insignificant amounts? (lol me)


Depending on what way you claim your vehicle travel, generally you can't claim your car payment. You can usually claim a percentage of the interest charges, fees etc however you'll need a logbook for the Uber klms traveled. The alternate is to claim a realistic amount of klms (that you can show ATO, if asked) under 5000km.

The ATO have announced a crackdown on all ride-sourcing drivers and will seek data from Uber directly and financial institutions to data match your on track with your obligations. It's because so many drivers are disregarding their GST obligations and many early adopters of Uber thought of the money as "beer money" and not taxable income.


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## nickl (Mar 19, 2016)

Damnit. I was going to list it on my income tax statement as 'beer money'

They are onto me.

I really only ever regarded uber money as "borrowing against my car" and "borrowing against the ATO" until I could find a real job. Which I have, so time to pay back my dues i suppose.


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## Instyle (Oct 18, 2014)

nickl said:


> Damnit. Time to pay back my dues i suppose.


Unfortunately so.. Personally the risk far outweighs the small gain. Technically they could audit you 4 years down the track and anything owed incurs interest from when it was originally due i.e GST.


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