The income you earn from ride-sharing is taxable income. This includes fares, tips or bonuses from the digital platform. You must declare it in your income tax return. This applies even if you're providing ride-sharing services on a casual basis to supplement your income from another job or other business activities.
You can also claim deductions for expenses that directly relate to earning your ride-share income.
Filing your income tax return
Because you are operating a business, if you earn income from ride-sharing services you need to include this income and the deductions in your income tax return regardless of how much you earn.
Income tax returns are filed annually, usually covering the period 1 April to 31 March.
Claiming business expenses
Expenses you incur while providing ride-sharing services are deductible. Expenses can include costs related to maintaining or operating assets, such as a vehicle or mobile device.
Expenses can sometimes be both income-earning and for private use when providing ride-sharing services. You can only claim a deduction for the income-earning part of the expense. You need to work out the amount of income-earning use and use this amount to work out how much of your expenses you can claim.
Some service fees or commission charged by a personal service platform may be claimed as a deduction in full, depending on the nature of the fees and charges.
Some examples of expenses you may be able to claim, if they were incurred while providing ride-sharing services, include:
- depreciation for assets you own, such as your vehicle (you need to be able to prove ownership)
- service fees or commission charged by the digital platform
- lease payments for a vehicle
- parking fees
Working out the business part of an expense
When you claim the income-earning part of an expense as a deduction, you need to be able to show how you calculated the amount.
Common ways to show how you split expenses include:
- keeping diary entries of specific usage throughout the year
- claiming expenses from an itemised bill.
Calculating vehicle expenses
You will likely use your vehicle for ride-sharing services and personal use, which means you need to split any vehicle expenses.
There are two methods to work out vehicle use:
- keeping a logbook
- keeping actual records.
When applying a method, you:
- can use different methods for different vehicles
- must keep appropriate records.
Expenses that can not be claimed
There are some expenses that can not be claimed because they're personal expenses or not allowed under the law. This includes things like:
- the cost of getting and maintaining a driver’s licence
- fines, for example speeding or parking fines
- personal or private expenses, such as meals you purchase while on a break, or the private use of a vehicle used for ride-sharing activities.
As well as the usual reconds, records you must keep for ride-sharing include:
- statements from ride-sharing digital platforms that show your income
- receipts of any expenses you want to claim deductions for
Records for business expenses can be kept in hard copy or electronically. All records need to be kept for seven years following the filing of your income tax return.