Uber drivers, like any other employee, are also required to pay income taxes out of Uber driving. They can also claim tax deductions out of their expenses that are directly related to Uber driving.
There are two different methods for claiming motor vehicle expenses. The driver may choose whichever method where he can get the highest tax deduction.
There used to be 4 methods of calculating deductions for Motor Vehicle Expenses. As of 1st July 2015 two methods have been scrapped. The only two left are the cents per kilometre and the log book method.
[ctt template=”9″ link=”322hc” via=”no” ]There are two different methods for claiming motor vehicle expenses: the cents per kilometer and the log book method.[/ctt]
Cents per Kilometre
The Cents Per Kilometer Method allows the driver to claim a set rate per kilometer of Uber driving up to a maximum of 5,000 kilometers. For this financial year, the set rate is 66 cents per kilometer. With this method, the driver doesn’t need to have written evidence to support the expenses incurred.
If he had driven more than 5,000 kilometers for Uber, the second option will give him a greater deduction. If the driver did more than 5,000 kilometers of Uber driving, and kept records of all his vehicle’s running costs, he can claim a certain percentage of his vehicle’s running costs.
The Longbook method
The second method which is the Logbook method, enables the driver to claim the business-use percentage of each car expense, based on the logbook records of his car’s usage. Common running costs are insurance, fuel, registration, fuel, repairs and maintenance and car depreciation.
With this method, the driver needs to have evidences or proof the expenses like receipts for fuel, registration, cleaning, repairs and maintenance, tax invoice of the vehicle to compute the car’s depreciation and a valid logbook for a 12-week period in the first year of business.
Other expenses that are also deductible are mobile phone costs and costs of becoming an Uber driver. Only the application fees paid at the start before becoming an Uber driver can be deductible.
The amount paid to Uber for the mobile phone or only a percentage of the driver’s personal mobile phone. Toll and parking fees, police and medical checkups are also deductible. Bookkeeping costs, accountant’s fees and bank fees if the driver has a bank account exclusive for his Uber earnings can also be deducted.