The Australian Taxation Office (ATO) continues to focus on new business models in the sharing economy, especially platforms like Uber. In August 2015, the ATO sent letters to around 30,000 Uber drivers, directing them to register for GST. As professional CPA accountants and tax agents, we’re here to guide Uber drivers through GST requirements and how to complete their end-of-year Uber tax return and GST lodgment properly.
In the United States, Uber appealed similar regulatory actions, arguing that its service does not qualify as part of the traditional taxi industry. Since most Uber drivers earn under $75,000 annually, they claimed GST registration wasn’t necessary. The case was scheduled to be heard in the Federal Court in July 2016.
GST Rules and the Taxi Industry Exception
Under the GST Act 1999, businesses must register for GST if their expected annual turnover exceeds $75,000. If your turnover is below that threshold, you can choose to register voluntarily and use the annual reporting method. However, once your turnover goes over $75,000, registration becomes mandatory, and you must report either quarterly or monthly. Monthly reporting only applies to businesses with a turnover exceeding $20 million.
An important exception exists for the taxi industry. Section 144 of the GST Act 1999 states that any taxi operator must register for GST regardless of their income level. Although Uber drivers may not wear uniforms or use modified vehicles with signage, the ATO argued that Uber functions as a taxi service, and thus falls under this requirement. As the ATO put it: “If it smells or sounds like a taxi, it is a taxi.”
Once a business registers for GST, it must report GST on all taxable sales and claim input tax credits on business-related purchases — both capital and non-capital. Uber drivers must track and report GST for every trip they complete. In return, they can claim credits on costs like vehicle maintenance, fuel, mobile phone usage, and other eligible expenses.
In our next section, we’ll explain the Uber business model and how you can manage your tax obligations more effectively.
Guide for every UBER driver when doing tax return
How Uber’s International Fare Flow Affects Your GST Obligations
Passengers book trips through the Uber app and pay the fare online. Uber in the United States then assigns the ride to a driver. The full fare — let’s say $100 — is routed to Uber in the Netherlands, which retains 15% to 20% (e.g. $20) as a platform fee. Uber then transfers the remaining 75% to 80% ($80) to Australian drivers.
Uber Netherlands also operates in Australia under Uber Australia, and it pays 5% of the fare — plus operational costs — to its Australian arm.
Now, here’s where it gets tricky for tax reporting. While Uber drivers in Australia only receive around $80 of the $100 fare, the ATO requires them to report the full fare (grossed up to $110, including GST) as their taxable sales. Drivers must then pay 1/11 of that total — $10 — as GST, even though they didn’t receive the full amount.
This raises a critical question: can Uber drivers claim the 20% ($20) fee taken by Uber Netherlands as a GST input tax credit? Technically, yes — but Uber Netherlands often classifies this portion as a GST-free overseas supply covering marketing, admin, and platform costs. As a result, Australian Uber drivers may not receive any GST credits on this amount, forcing them to bear the extra GST burden. This setup places an unfair tax load on local drivers.
How to Handle Your End-of-Year Uber Tax Return
Completing your Uber tax return is straightforward, as long as you stay organised. You’ll need to calculate your net GST position by subtracting total GST on purchases from GST collected on sales. You’ll also need to compute your net profit for the year.
Make sure to keep all invoices and documentation for car-related expenses, including your logbook, petrol, repairs, pink slip, registration, and insurance. The 20%–25 % fee charged by Uber Netherlands should be included as a business expense (excluding the GST component if not claimable).
If you’re operating an Uber business, reach out to EndureGo Tax at 02-8958-1959 or email us at hello@endurego.com. Our team of qualified CPA accountants will help you optimise your GST position and maximise your tax refund.
