Concepts
Ridesharing
Ridesharing is the practice of using an app to connect a driver and a passenger for a paid trip in a private vehicle, and for GST the driver is treated like a taxi operator.
Ridesharing describes paid trips arranged through a smartphone app, where a driver uses their own car to carry a passenger and the platform handles booking and payment. For GST purposes the label matters less than what the driver is actually doing: supplying passenger transport for a fee. The ATO treats that activity in the same way as a taxi service, which is why the GST rules for ridesharing are different from those for most other small businesses.
The headline rule is that anyone who drives passengers for a fee through a ridesharing arrangement must register for GST from the very first fare, regardless of how little they earn. The usual GST registration threshold of $75,000 does not apply to taxi and ride-sourcing drivers. To register you first need an Australian Business Number, and the registration then lets you charge GST and claim credits. Many new drivers are surprised to learn this applies even when the driving is only a weekend side income.
Once registered, GST is included in the full fare paid by the passenger. The fare is a taxable supply, so one-eleventh of the total fare is GST that you owe to the ATO, not income you keep. This applies to the whole fare, not just your share after the platform takes its commission. The platform typically also charges you a service fee, and that fee is a separate supply from the platform to you, which usually carries its own GST and should be backed by a tax invoice or equivalent documentation you can use when preparing your BAS.
On the purchase side, a registered driver can generally claim GST credits for the GST in business costs such as fuel, servicing, tyres, phone data used for the job, car washes and the platform fee, but only to the extent the cost relates to carrying on the enterprise. If a car is also used privately, only the business portion of the GST can be claimed. Credits on buying the vehicle itself are subject to the car limit, which is set by legislation and changes, so check ato.gov.au for the current figure.
Drivers report GST on the business activity statement, usually quarterly. Labels for total sales and GST on sales are completed from your trip earnings, and credits are reported against your purchases. Keep trip summaries, platform statements and receipts for five years. Because GST is calculated on gross fares while the money you receive is net of platform fees, it is wise to set aside the GST portion as you go so a BAS payment does not come as a shock.
A common misunderstanding is that the platform handles all GST on the driver's behalf. The platform deals with its own obligations, but the driver remains responsible for registering, lodging the BAS and paying the net amount. Another is that GST registration can be delayed until the driver passes $75,000. That is not the rule for this activity, and late registration can lead to GST being payable on fares already collected without having been charged separately.
Ridesharing income also has income tax and possibly super implications that sit outside GST. This is general information only, so confirm how these rules apply to your own circumstances with the ATO or a registered tax professional.
Worked example
Mia drives for a ridesharing app and collects $9,900 in total fares for a quarter, with the platform keeping $2,200 in fees and she receives $7,700. GST on her sales is $9,900 divided by 11, which is $900. She also paid $3,300 for fuel and servicing, all business related, giving credits of $300. The platform fee of $2,200 carries credits of $200. Her net GST for the BAS is $900 less $500, so $400 payable.
Practical tips
- Register for GST before your first paid trip, not when income reaches $75,000. The usual threshold does not apply to taxi and ride-sourcing drivers.
- Calculate GST on the full fare shown to the passenger, not on the amount deposited to your account after the platform deducts its fee.
- Keep a logbook or other records of business and private use of your car, because you can only claim credits for the business portion.