Last December, Rani decided to make some extra money on the side by becoming an Uber driver. After a few weeks, she gave up her full time job in favour of driving every day.
“I’d had enough of my last job so I thought I’d give Uber a go,” she laughed. “People thought I was crazy, but I thought there was only one way to find out if it was worth it.”
Rani is just one of a growing number of people around Australia taking up driving for a ridesharing service such as Uber, doing odd jobs through Airtasker, getting on a bike to deliver restaurant meals ordered via Deliveroo, or working up new business cards for a soon-to-launch startup from the other side of the world on 99Designs.
These ‘Taskmasters’ are making the most of the sharing economy, the value of which in Australia is expected to hit $55 million in the next five years.
The latest statistics show Australians are now actively spending on or earning from a sharing economy service, with ridesharing among the sharing economy services increasing most in use over the last six months.
“I just like how flexible Uber is,” Rani explained.
“I can finish a job, log off, and when I want to start again I just log on again. I love the flexibility of it, and I actually don’t feel like I’m working because I literally just drive and talk to people all day long. I feel like I’m just socialising all day.”
Generally starting at 7 or 8 in the morning Monday through Friday and finishing around 4, Rani said she is able to manage her hours to take a day off if she wants, like she did on Labour Day, and simply make them up by working later on another day. If she’s got no plans of an evening or weekend, she’ll drive.
As well as flexibility, Rani said driving for Uber has opened Melbourne up to her. Simply logging on to the driver app and letting the rides take her where they may, she has now discovered parts of the city she barely knew existed.
“I never even realised there was so much in places like Abbotsford, for example, because I just never really noticed,” she said.
“Now I take people up little laneways where you wouldn’t even realise there are cafes or restaurants, and even just picking people up that work in hospitality, I always ask them where they work and they say, ‘such and such restaurant, you should try it’, so I’ve got a really long list of restaurants I need to go to and try out. I see a lot.”
As she checks out all those new restaurants and cafes, however, Rani must make sure she’s taking care of all her tax obligations.
Income earned through Uber and other sharing economy services is just that – income – and it has to be declared, with income tax paid and sometimes also Goods and Services Tax (GST).
As most sharing economy services contract out jobs, taskmasters like Rani are effectively self employed and must therefore sign up with an Australian Business Number (ABN).
They might also be required to lodge regular Business Activity Statements (BAS), which allows them to report and pay GST – the ATO confirmed as of August 2015 that all Uber drivers are required to register for GST and pay the GST portion of their fares to the ATO; this is in addition to the income tax paid for income earned as a driver.
Other taskmasters not providing ‘taxi travel’ generally only need to pay GST when their income from these activities is greater than $75,000 annually.
Like many of us who have always been employees rather than self-employed, Rani knew she would have to pay her own tax but wasn’t aware of the fact she had to pay GST herself and lodge a BAS until after the ruling by the ATO. This prompted her to do some research, and she found Airtax.
Airtax is an online lodgements service for sole traders and freelancers. Through Airtax you can register for an ABN and GST, complete your BAS and submit your tax return in minutes. All submissions are lodged by a tax agent and with notifications, the app aids those working in the task economy by offering an easy and accessible way to remain tax compliant in the case the ATO was to audit them.
Uber drivers are able to deduct a number of expenses for tax purposes such as their car registration, insurance, repairs, maintenance, and car cleaning costs, as well as costs directly related to becoming and operating as a driver. These might include mints and water for passengers, tolls, work-related phone use, any relevant music subscription fees. Airtax helps in this process by taking users through each step, outlining common expenses to reduce the GST owed.
The Airtax app can also be directly integrated with the Uber driver partner app, so an Uber driver can pull their driving income directly into Airtax for speedy GST compliance.
“It’s really straightforward, because there are different categories telling you about the information you need to insert,” Rani explained.
“It’s a lot easier than trying to do it yourself; I wouldn’t even know where to start if I went on the ATO website.”
Not having to worry about her taxes, Rani gets to focus on chatting with passengers and working through her list of must-visit restaurants.
Unsure of your tax obligations as a sole trader? visit Airtax’s comprehensive Help Centre to learn more. You can sign up to Airtax for no upfront cost.
