Research shows that Australians spend more than $2.6 billion every year on food delivery services like UberEats and Deliveroo. As this number grows every year, so does the number of delivery drivers.
With the ATO now targeting delivery and rideshare drivers through their bank records and the ABN register, it is important that you don’t overclaim. If you’re thinking of driving for a food delivery company, like UberEats, and you’re wondering about taxes - this blog is for you.
If you only do food delivery:
You must have an ABN, as you’ll be paid as a contractor, but you do not have to register for GST. The only exception here is if you were to earn over $75,000 a year from the food delivery. (standard GST rules apply here).
If you do food delivery and rideshare:
Rideshare drivers (for example Uber and DiDi) are required to register for GST. So, if you drive both food delivery and rideshare, you must register for GST, because of rideshare. However, the catch here is that GST registration applies to all business activities, not just the rideshare driving. You’ll end up paying it on both incomes. To offset this you can claim back the GST on your delivery expenses to reduce the bill, but you’re still likely to pay a portion of the delivery to the ATO in GST.
Declare regardless of how much you make with your delivery services and aim to put aside some earnings to avoid a big tax bill. Everyone’s tax bill is different, depending on a variety of factors, but a rough rule of thumb is to put aside:
- 10-15% if food delivery is your only source of income, or
- 20-25% if food delivery is your second job.
Logbook vs. cents per kilometre for delivery drivers
In order to file any tax claims as a delivery driver, you must keep a record of your expenses. You can choose to either keep a logbook or use the ‘cents per kilometre’ method.
Keeping a logbook
Records you need to include:
- Fuel - fuel receipts,
- Other running costs - receipts or bank records of registration, insurance, servicing, repairs, tyres, maintenance, cleaning & other costs,
- Car washes - if you don’t get a receipt, the ATO will accept a written note with the date and cost of the service,
- Depreciation - provide a tax invoice or the purchase details of car, so that the depreciation can be calculated,
- Interest - find out how much interest you paid (not loan repayments, just the interest) for the financial year. If you don’t have it, provide the original loan documents showing the amount borrowed, repayments, term of loan and interest rate,
- Lease payments - if you lease, the whole amount of lease payments are deductible,
- The logbook itself.
Best logbook practices:
- The logbook must go for 12 weeks. It is ok if it goes past the 30th of June, it will still count for the current financial year as long as you start recording before that date.
- There is no need to record individual deliveries. One entry for one shift or session of driving is enough. Just don’t record private or non-business trips.
- Record the date and odometer reading of your car at the start and end of each shift or session.
- Start the logbook when you leave home and end it when you get back. The kilometres to and from your house, and in between deliveries can be included.
If you use a motorcycle or bicycle for your deliveries, you also need to give a reasonable estimate of what percentage you use it for business purposes. You don’t need to keep a formal 12 week logbook, but keeping some kind of log for a few weeks might be helpful to back up your claim.
Cents per kilometre method
If you don’t want to keep a logbook, you can use the ‘Cents per Kilometre’ method to claim car deductions. The cents per kilometre method allows you to claim 68 cents per kilometre up to 5,000km, which results in a maximum deduction of $3,400.
You’re required to make a reasonable estimate, based on work patterns, diary notes, records of the company you drive for, etc. You can claim kilometres in between trips, as well as delivery or passenger trips, and kilometres travelled between home and your first trip, and last trip.
If you don’t have a receipt, the ATO will accept bank statement records or a note of the date and the amount of the expense. However, if you’re registered for GST, you must have a tax invoice for expenses over $82.50 in order to claim for GST.
Deductions for delivery drivers
You can claim:
- Commissions, licensing or service fees paid to the platform you deliver for
- Other fees (medical tests, police check, driver accreditation, driver training, etc.)
- Tolls - only if you paid them during or in between trips
- Rider amenities (water, mints, tissues, etc.)
- Parking - write a note with the date and cost if you don’t get a receipt and it’s under $10
- Equipment and accessories (dash cam, seat covers, mobile phone holder, etc.)
- Renewing vehicle licensing or registration
- Mobile phone bills - only the percentage you use for business purposes
- Music apps
- Home office expenses (stationery, computer expenses, a percentage of home internet bill, etc.)
- Car expenses
- Safety equipment (such as high visibility vests)
- Costs of cleaning, servicing and repairing vehicles (car, scooter, bike, or anything else you use for business purposes). Note: Logbook will be required for such items
- Tax agent or accountant fees
- Bank fees - only if you have a separate account for the delivery work
You can’t claim:
- Costs for obtaining a normal driver's license
- Fines (parking, speeding, etc) - even if they’re directly related to the platform you work for
- Costs for clothing - other than safety clothing
- Costs for personal hygiene
- Costs for meals and drinks purchased while on shift
Thinking of becoming a modern day delivery driver in the sharing economy? Be sure to do the rounds with ITP Qld first, or at the very least, familiarise yourself with our tips and tricks. Find your nearest ITP Business Centre and get in touch with an ITP specialist.