A year of stay-at-home orders has seen food delivery platforms like Ubereats, Menulog and Deliveroo explode in popularity.
More people than ever are getting their food delivered right to their door. And as many Australians have searched for alternative forms of income, the amount of people working as delivery drivers has grown as well.
If you’ve recently started work in this field, there are several tax obligations you might not be aware of. Read on and learn our tax guide for food delivery drivers.
You must register for an ABN
Working for a food delivery platform like UberEATS means you are classified as a sole trader (sometimes called a contract worker), so it’s important you’re aware of your obligations.
You are required by law to register for an ABN, which you can apply for online via the Australian Government Australian Business Register website. It’s free and fairly straightforward to register.
You may also need to register for GST
If your turnover in a 12 month period is more than $75,000, then you’ll be required to register for GST. This is a requirement for all sole traders in Australia who earn above this amount. Once you have received your ABN you can register for GST via the ATO business portal or over the phone on 13 28 66.
If you’re a food delivery driver who also spends time driving for rideshare services like Uber or Ola, then your taxes will be a little more complicated. You’ll likely have to apply for GST, regardless of your income.
This is because rideshare drivers work under different GST laws compared to the average sole trader. If this is the case, get in touch with Ezytaxback today and our customer care team will help you understand your obligations.
Keep records for your claimable deductions.
Like most sole traders, there are a lot of different deductions that you may be able to claim on your tax return. This is because there are generally a lot of outgoing expenses required to generate business income through delivery services. Claiming these can help offset your income at tax time.
Here is a list of the most common expenses for delivery drivers:
- Fees incurred such as UberEATS, Government charges and commissions
- Motor vehicle running expenses
- Tolls
- Parking
- A portion of your mobile phone bill
- Uniforms such as a high visibility vest when riding or a helmet.
- Insurance
If you’re claiming a deduction for any work-related expense, it’s important that you keep all related receipts. You should also keep a diary of records, or have transaction history on hand via bank statement. The ATO may require proof of claims if they decide to audit you, and you’ll need to provide it.
When it comes to recording expenses from work-related travel, it’s good practice to maintain a logbook that shows the distance travelled for work. I’ll talk more about this shortly.
Set up PAYG instalments with the ATO.
As a contractor, it’s important you stay on top of your tax obligations and put aside a portion of your income for the ATO. Setting aside around 30% can help shelter you from a big shock at tax time.
The easiest way to manage your tax obligations is to set up a quarterly PAYG instalment plan with the ATO. If you don’t, you’ll be paying zero tax throughout the year, and you’ll likely end up facing a huge tax debt when tax time rolls around.
You can voluntarily set up and manage your PAYG instalment plan through your online MyGov account. It’s super easy to set up and will also help smooth out your cash flow during the financial year.
Keep a valid Logbook
It’s common for delivery drivers who work full-time to clock well over 40,000kms in a year, which means motor vehicle expenses are usually the highest work-related expense claim.
To maximise your deductions, it is advised for delivery drivers to maintain a logbook. This way, all outgoing expenses related to your motor vehicle can be captured and added to your tax return.
Your logbook will help you calculate the work-related proportion of your vehicle expenses. You’ll need to keep a running record of distance-travelled for a minimum period of 12 consecutive weeks. You’ll also need to record the odometer readings throughout this period to work out your work-related percentage.
Your logbook is valid for 5 years. Therefore, it’s worthwhile for you to invest some time into producing a logbook now – especially if you know you’re going to incur high motor vehicle costs due to work-related travel.
Some of the motor vehicle running expenses you can claim a deduction for include:
- Fuel
- Insurance
- Registration
- Interest on loan repayments
- Depreciation of your motor vehicle
- Repairs and maintenance costs
For all expenses claimed using the logbook method, you must have substantiating receipts or transaction records to be eligible for a tax deduction. Unfortunately, if you took out a loan to acquire the vehicle, principal repayment costs are not deductible. Improvement costs are also not eligible.
I hope this article has given you a clearer idea of your tax obligations as a delivery driver. One last piece of advice I’d add is that you should never try to DIY your tax return, especially if you’re new to contracting and you’re feeling overwhelmed.
Instead, you should consider using an affordable online tax-return service like Ezytaxback. Our team of experienced tax professionals will help you claim all eligible deductions and get the most out of your tax. We’ll make sure that you meet all of your obligations.
DISCLAIMER: This article is general advice only. It does not consider your own personal circumstances and therefore may not be applicable to you. You should obtain professional advice and consider your own situation before acting on the above advice.
