In this guide we will show you how rideshare drivers could save over $7,000 in tax by claiming common tax deductions. 

This simple step-by-step guide show you how to calculate common deductions claimed by rideshare drivers.

Not only will this save you time, but it will also help you claim the right amount and avoid potential penalties later on.

Best yet, we will also show you how to claim these deductions in your tax return.

Rideshare drivers who own their own car are able to claim some of the running costs. Running costs can include fuel, insurance, registration, roadworthy certificates, repairs, maintenance, servicing, cleaning, depreciation, interest on car loans and leasing or hiring fees. 

The amounts that can be deducted will depend on the number of kilometers travelled for work and whether a logbook record is kept. Whilst it is not necessary to keep a logbook, it can increase deductions and tax savings. 

To be valid, a logbook record must be kept for at least 12 continuous weeks. During that period the odometer reading at the start and end of every trip must be recorded, for both work and personal trips.

Whilst time consuming, the benefit of keeping a logbook record is that it can substantially increase the amount of the car running costs that a rideshare driver can claim for tax. Also, a logbook is valid for up to five years of tax returns.

If a valid logbook record is kept, then you can use the Logbook Method for deducting car expenses. The Logbook Method enables rideshare drives to deduct the actual costs of running the car whilst ridesharing. For rideshare drivers it is possible for this deduction to be over $10,000.

Where a valid logbook has not been kept, then the amount the rideshare driver can deduct for running their car is limited to a maximum of $3,900 under the Rate Per Kilometer Method. 

The Rate Per Kilometer Method enables a rideshare driver to claim 78 cents for every kilometer traveled whilst rideshare driving up to a maximum of 5,000 kilometers. 

• Sergio logs all rideshare and personal trips for a continuous 12 week period. During this time he drove 26,400 kilometers in total of which 7,392 kilometers were for personal trips and 19,008 kilometers were for rideshare trips.

• Sergio calculates that 72% of his trips were for rideshare driving (i.e. 19,008kms divided by 26,400kms)

• Sergio reviews his bank transactions for the 2022-23 financial year and calculates that he spent a total of $7,077 on car expenses including $2,640 on petrol, $913 on car registration, $672 on car insurance, $548 on car servicing, $384 on car cleaning and $1,920 on interest on a car loan.

• Sergio’s total deduction for car running costs is $5,095 (i.e. $7,077 multiplied by 72%).

• Sandra started ridesharing driving late in the 2021-22 financial year when she came across a platform for women drivers and passengers. Because she was new to rideshare driving, she wasn’t aware of the benefits of keeping a logbook for tax purposes. 

• During the 2022-23 financial year she estimates that she drove 3,218 kilometers whilst rideshare driving. She came to this conclusion by reviewing the total distance of her trips as provided to her by the rideshare platform she uses. She downloads a record of these trips. 

• Sandra calculates her deduction for her car running costs using the cents per kilometer method which allows her to claim 78 cents per kilometer traveled whilst rideshare driving. 

• Sandra’s total deduction for car running costs is $2,510 (i.e. 3,218kms multiplied by $0.78/km)

In the Income section of airtax.com.au then:

• select the Sole Trader option 
• click on Attach a sole trader business. 

You will then be redirected to the Sole Trader Business section, once there then

• scroll down to the Business Deductions section

• select Yes to the Did you have any car/vehicle expenses from work related to your sole trader activities? question 

• select your Car/vehicle deduction method (i.e. Rate per KM or Logbook Method)

• if you selected Rate per KM then enter your Business KMs travelled

• if you selected Logbook Method then enter the percentage of your car’s kilometers driven for rideshare in Business use percentage of vehicle field followed by the total amount spent on each car running cost (i.e. Fuel, Motor Vehicle Registration, etc.)

Rideshare drivers who purchased their car during the 2023 financial year (i.e. 1 July 2022 to 30 June 2023) may be able to claim some or all of the cost of their car as a tax deduction. How much of a car’s cost can be deducted for tax by a rideshare driver is determined by several factors. Similarly to claiming a car’s running costs, only the portion of the car’s use for rideshare driving can be claimed as deduction.  

To determine what percentage of the car’s use is for ridesharing, the best approach is to keep a logbook. If a log book has not been kept then this percentage can be estimated. 

One way to estimate the percentage of the car’s use for ridesharing is using trip summary data provided by rideshare platforms. The kilometers travelled for ridesharing in the financial year can then be compared with the total kilometers driven, which can be read on the odometer to estimate this percentage.  

The cost of the car may be deducted in full under the instant asset write-off rules. The instant asset write-off is limited to the car limit of $64,741 for the 2022–23 income tax year.

Given the large size of the deduction and the complexity involved in claiming it, we recommend booking a call with a Vialto Partners accountant if you intend on deducting your car’s purchase cost. To do so, please click here, log into Airtax, then send an email to help@airtax.com.au and a Vialto Partners accountant will be in touch.

Rideshare drivers will pay several fees and charges which can be deducted for tax. This can include fees to rideshare partners (e.g. Uber, Shebah and Didi), booking fees, split fare fees, airport fees, Government fees, tolls and parking. 

These amounts are usually detailed in the end of your tax summary provided by the rideshare partner. 

If you’ve used Airtax to lodge your BAS throughout the financial year, then these amounts will automatically be populated into your Airtax tax return. 

• Rohit receives his end of financial year trip summary from the rideshare platforms he uses. 

• Rohit adds up the all the fees (e.g. booking fees, service fees, airport fees, etc.) and tolls which he calculates to be $13,885 for the 2022-23 financial year

• Rohit’s total deduction for rideshare fees and charges to be $13,885. 

Go to the Sole Trader Business section of airtax.com.au then:

• scroll down to the Business Deductions section

• select Yes to the Did you have any other business expenses? question 

• add the total amount paid for rideshare fees and charges (e.g. fees to rideshare partners, booking fees, split fares, etc.) to the Amount field.
  

To become a rideshare driver, you will need to undergo a few checks such as a police check and medical check. There may be costs associated with doing this that can be deducted in your tax return.

The cost of police and medical checks can be deducted if these were required to become a rideshare driver.

• Fatima decides to start rideshare driving whilst her children are in school which requires her to pay for a police check and a medical check. 

• Fatima’s police check costs her $49 and the medical check costs her $93 after receiving Medicare rebates.

• Fatima’s total deduction for licenses and permits is $142. 

Go to the Sole Trader Business section of airtax.com.au then:

• scroll down to the Business Deductions section

• select Yes to the Did you have any other business expenses? question 

• add the total amount paid for licenses and permits to any amount already entered into the Amount field

There are several common pieces of equipment that rideshare drivers purchase for work. These can include a mobile phone holder, a dash cam, seat covers and sunglasses. Deductions can be made for the purchase of equipment used whilst rideshare driving. 

Rideshare drivers also commonly purchase consumable items for riders. These can include bottled water, breath mints, chewing gum, hand sanitiser and tissues. The cost of these items may be deducted for tax purposes.

• Navneet purchases a dash cam and mobile phone charger to use solely when rideshare driving, together these items cost a total of $84. 

• Naveneet purchases hand sanitiser, clean wipes and tissues to maintain hygiene for herself and passengers, during the financial year she spends $58 on these items 

• Naveneet also purchases breath mints and water to offer passengers, she spends $71 on these items during the financial year. 

• Navneet’s total deduction for equipment and consumable items is $213 (i.e. $84 + $58 + $71).

Go to the Sole Trader Business section of airtax.com.au then

• scroll down to the Business Deductions section

• select Yes to the Did you have any other business expenses? question 

• add the total amount paid for equipment and consumables to any amount already entered into the Amount field.

Rideshare drivers will use a mobile phone whilst driving to accept and rate riders as well as to navigate to pick up and drop off points. Some or all of the cost of purchasing the mobile phone may be deductible. 

Rideshare drivers may also do work whilst at home. This work can include keeping up to date with the latest community guidelines, reporting an incident, submitting BAS returns and paying work related bills. 

When working from home rideshare drivers may use their mobile phone, but may also use their computer. 

If a rideshare driver uses their computer for work, then they may claim a deduction for part or all of the cost of purchasing the computer.

Only the portion of a mobile phone or computer that relates to work can be deducted. It is acceptable to estimate the split between work and personal use. 

• Jose has been rideshare driving for a few months and realises that his mobile phone is difficult to view maps on so he decides to upgrade his phone. 

• Jose purchases a new phone outright for $760 and has no other computer equipment purchases
  
• Jose estimates that in a typical week he uses his phone 36 hours a week for ridesharing (i.e. 9 hours a day, 4 days a week) and uses his phone 21 hours a week for personal use (i.e. 3 hours a day, 7 days a week). His total phone use each week is estimated at 57 hours. He then estimates that 63% (i.e. 36 hours a week for ridesharing divided by 57 hours a week in total) of his phone usage is for rideshare driving.
  

• Jose’s total deduction for computer equipment is $479 (i.e. $760 multiplied by 63%).  

Go to the Sole Trader Business section of airtax.com.au then:

• scroll down to the Business Deductions section

• select Yes to the Did you purchase any capital assets (e.g. car) for use in your business this financial year? question

• select Other for the Type of Asset

• enter the total cost (including GST) of purchasing the computer equipment in the Purchase Value (inclusive of GST) field

• enter the percentage the computer equipment is used for rideshare driving in the Business use percentage field 

• Enter the date the computer equipment was purchased in the Date of Purchase field.

In addition to the cost of purchasing their mobile phone, rideshare drivers can also claim a tax deduction for some or all of their mobile phone bill. If a mobile phone is also used for personal use, the portion of the mobile phone bill that is used for rideshare driving can be deducted. 

However, mobile phones will usually be used for both rideshare driving but also personal use. If this is the case, then the portion of the mobile phone bill that is used for rideshare driving can be deducted. 

It is acceptable to use an estimate when determining how much of a mobile phone bill is for rideshare driving. 

• Darren does ridesharing driving only on the weekends but does 12 hours of driving each day on those days. 

• Darren uses his mobile phone whilst rideshare driving and also uses it during the week for personal use. 

• Darren estimates that he uses his mobile phone for rideshare driving two days of the week which is 28.5% (i.e. 2 days divided by 7 days) 

• Darren’s monthly mobile phone bill is $55 and $660 annually. 

• Darren’s total deduction for his mobile phone bill is $188 (i.e. $660 multiplied by 28.5%).

Go to the Sole Trader Business section of airtax.com.au then:

• scroll down to the Business Deductions section

• select Yes to the Did you have any other business expenses? question 

• add the portion of the mobile phone bills that are for rideshare to any amount already entered into the Amount field.

Some rideshare drivers may have used the services of a tax accountant like Airtax to help them prepare and lodge their tax return in the prior year as well as lodging their BAS in the current tax year. 

The amount paid to the tax accountant can be claimed as a deduction in the financial year it is paid.

• Paul engaged a tax accountant to help him lodge his income tax return and his 2022-23 BAS lodgements. 

• Paul paid the tax accountant $99 in October 2022 for lodgement of his income tax return as well as $196 in total for four BAS lodgements.  

• Paul can claim a deduction of $295 (i.e. $99 + $196) for managing his tax affairs in his annual tax affairs. 

Go to the Sole Trader Business section of airtax.com.au then:

• scroll down to the Business Deductions section

• select Yes to the Did you have any other business expenses? question 

• add the total cost of tax accountant fees to any amount already entered into the Amount field.

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