Easy GST for Uber Drivers

Driving for Uber in New Zealand involves understanding GST (Goods and Services Tax) obligations, but don't worryÔÇöthe system has been designed to make it as straightforward as possible for drivers. Whether you're new to ride-sharing or have been driving for a while, this guide explains everything you need to know about GST as an Uber driver in simple, easy terms.

What is GST and Why Does It Matter for Uber Drivers?

Understanding GST Basics

GST stands for Goods and Services Tax, which is a 15% tax applied to most goods and services in New Zealand. When passengers pay for rides, GST is included in the fare they pay. As an Uber driver, you're providing a transport service, which means GST applies to your earnings.

The great news is that Uber has implemented systems to handle most of the GST complexity for you, making compliance much easier than it would be if you were managing everything yourself.

How Uber's GST System Works

Since 1 April 2024, Uber operates under special arrangements with Inland Revenue that simplify GST for drivers:

• Uber collects the full fare amount from passengers (including GST)
• Uber handles the GST collection and payment responsibilities
• Your earnings are processed differently depending on your GST registration status
• The system works automatically without requiring complex calculations from you

This arrangement means you can focus on driving rather than worrying about GST administration.

Your GST Status: Registered vs. Non-Registered

Non-GST Registered Drivers

If you're not registered for GST, here's how the system works for you:

• You don't need to register for GST unless your annual earnings from all sources exceed $60,000
• Uber handles all GST collection and payment on your behalf
• You receive a GST credit to help offset GST you pay on business expenses
• No GST returns need to be filed by you
• Your income is treated as GST-inclusive, but you don't need to worry about the GST component

Most casual or part-time Uber drivers fall into this category and find it very straightforward.

GST-Registered Drivers

If you're registered for GST (either because you chose to register or because your income exceeds $60,000), here's what applies:

• Uber still collects GST from passengers and pays it to Inland Revenue
• Your Uber earnings are treated as zero-rated supplies for GST purposes
• You still need to file regular GST returns
• You can claim GST input credits on business expenses like fuel, vehicle maintenance, and insurance
• Your Uber income is reported as zero-rated in your GST return

This arrangement allows you to benefit from GST input credits while avoiding the complexity of collecting GST from individual passengers.

Practical Examples for Different Driver Situations

Example 1: Casual Driver (Not GST Registered)

Sarah drives for Uber part-time and earns about $800 per month:

• A passenger pays $23 for a ride (this includes $3 GST)
• Uber collects the $23 and sends the $3 GST to Inland Revenue
• Sarah receives approximately $18 after Uber's service fee
• Uber provides Sarah with a GST credit of about 8.5% to help with her business expenses
• Sarah doesn't need to do anything with GSTÔÇöit's all handled automatically
• Sarah only needs to declare her net Uber income for income tax purposes

This keeps things very simple for casual drivers.

Example 2: Full-Time Driver (GST Registered)

Mike drives full-time and earns $80,000 annually, so he's registered for GST:

• A passenger pays $23 for a ride (this includes $3 GST)
• Uber collects the $23 and sends the $3 GST to Inland Revenue
• Mike receives approximately $18 after Uber's service fee
• In his GST return, Mike reports this $18 as a zero-rated supply
• Mike can claim GST on business expenses: if he spends $115 on fuel (including $15 GST), he can claim back the $15
• Mike's GST return shows zero-rated supplies from Uber and input credits from business expenses

This allows experienced drivers to benefit from GST input credits while keeping the collection process simple.

Example 3: Mixed Income Driver

Jenny drives for Uber and also runs a small cleaning business:

• Her combined income exceeds $60,000, so she's registered for GST
• Uber income: reported as zero-rated supplies in her GST return
• Cleaning business income: she charges GST to her cleaning clients
• She can claim GST input credits on expenses for both businesses
• Her GST return includes both zero-rated Uber supplies and standard-rated cleaning services

The system accommodates drivers with multiple income streams effectively.

Understanding Your Uber Driver Statements

What Your Uber Statements Show

Your weekly Uber statements include important information for tax purposes:

• Total fares collected from passengers (GST-inclusive amounts)
• Uber's service fees
• Your net earnings after fees
• Any applicable bonuses or incentives
• Information about GST treatment of your earnings

Keep these statements for your tax recordsÔÇöthey're important for both GST and income tax purposes.

How to Read Your GST Information

Your Uber statements will show:

• For non-registered drivers: your earnings with GST credit information
• For registered drivers: your earnings treated as zero-rated supplies
• Clear distinction between the passenger fare and your net earnings
• Any GST-related adjustments or credits

This information helps you understand exactly what to include in your tax returns.

Business Expenses and GST Claims

Common Uber Driver Expenses

As an Uber driver, you can claim GST on legitimate business expenses, including:

• Fuel costs (if GST-registered)
• Vehicle insurance
• Vehicle registration and licensing
• Maintenance and repairs
• Car cleaning and detailing
• Phone and data costs related to driving
• Uber driver supplies (water, mints, phone chargers)

Keep all receipts and invoices for these expenses to support your GST claims.

Mixed-Use Expenses

For expenses related to items used for both personal and business purposes:

• You can only claim the business portion of GST
• Keep records showing how you determine the business percentage
• Common mixed-use items include vehicles, phones, and insurance
• Be reasonable and consistent in your business-use calculations

For example, if you use your car 60% for Uber driving and 40% for personal use, you can claim 60% of vehicle-related GST.

Record-Keeping for Expenses

Good record-keeping helps maximise your legitimate GST claims:

• Keep all receipts and invoices showing GST
• Use a logbook to track business vs. personal vehicle use
• Record the business purpose of each expense
• Store records electronically for easy access
• Maintain records for at least seven years

Many drivers use smartphone apps to photograph receipts and track expenses.

GST Registration Decisions for Uber Drivers

When You Must Register

GST registration becomes mandatory when:

• Your total annual income from all sources exceeds $60,000
• This includes Uber earnings plus any other business or employment income that counts toward the threshold
• The calculation is based on a rolling 12-month period
• You must register within 21 days of exceeding the threshold

Monitor your income regularly to ensure you register on time if required.

Voluntary Registration Benefits

Even if not required, you might choose to register for GST if:

• You have significant business expenses with GST that you could claim back
• Your vehicle expenses are substantial
• You plan to expand your driving hours significantly
• You operate other businesses alongside Uber driving

Calculate whether the GST you could claim back exceeds the administrative burden of GST compliance.

Voluntary Registration Considerations

Before registering voluntarily, consider:

• The additional paperwork and compliance requirements
• The need to file regular GST returns
• Whether your expenses really justify the administrative effort
• That once registered, you must generally stay registered for at least two years

Many part-time drivers find the GST credit system for non-registered drivers meets their needs without the complexity.

Income Tax Implications

Declaring Uber Income

Regardless of your GST status, you must declare Uber income for income tax purposes:

• Include your net Uber earnings in your annual income tax return
• This is your earnings after Uber's service fees but before expenses
• You can claim legitimate business expenses to reduce your taxable income
• Keep detailed records of both income and expenses

Income tax is separate from GST, so both registered and non-registered drivers have the same income tax obligations.

Provisional Tax Considerations

If Uber driving becomes a significant income source:

• You may need to pay provisional tax if your annual income tax exceeds $5,000
• This involves making tax payments during the year rather than just at year-end
• Plan for this additional cash flow requirement
• Consider setting aside money regularly for tax obligations

Consult an accountant if you're unsure about provisional tax requirements.

Practical GST Compliance Tips

Setting Up Systems

Effective systems make GST compliance easier:

• Set up a separate bank account for your Uber earnings
• Use accounting software or apps designed for drivers
• Photograph receipts immediately using your phone
• Set up a simple filing system for tax documents
• Review your financial position monthly

Good systems save time and reduce stress during tax season.

Working with Professionals

Consider professional help if:

• Your Uber income is substantial or growing quickly
• You have multiple income streams
• You're unsure about GST registration decisions
• You want to maximise legitimate tax deductions
• You're finding compliance overwhelming

An accountant familiar with ride-sharing can provide valuable guidance and often save you money through proper tax planning.

Staying Informed

Stay up-to-date with changes that might affect you:

• Follow Uber's communications about tax-related updates
• Check Inland Revenue's website for ride-sharing guidance
• Join online communities where drivers discuss tax matters
• Review your tax position annually

The ride-sharing industry continues to evolve, and tax rules may change accordingly.

Common Questions and Scenarios

What if I Drive for Multiple Platforms?

If you drive for Uber, Ola, or other platforms:

• Each platform may handle GST differently
• Your total income from all platforms counts toward the $60,000 GST threshold
• Keep separate records for each platform
• Ensure you understand each platform's GST arrangements
• Consider the combined impact on your tax obligations

Multi-platform driving adds complexity, so good record-keeping becomes even more important.

What About Cash Trips?

While most Uber trips are paid electronically:

• Any cash income must still be declared for tax purposes
• GST obligations apply to cash income just like electronic payments
• Keep records of all income sources
• Be honest and transparent in your tax reporting

Maintaining integrity in your tax reporting protects you from potential issues with Inland Revenue.

What if I Have Other Business Income?

If you have additional business activities:

• All business income counts toward the GST registration threshold
• You may need to register for GST even if Uber income alone is below $60,000
• Different businesses may have different GST treatments
• Consider how multiple income streams affect your overall tax position

Complex situations benefit from professional tax advice to ensure compliance and optimisation.

Technology and Tools for Uber Drivers

Expense Tracking Apps

Useful tools for managing your driver expenses:

• Receipt scanning apps that capture expense details
• Mileage tracking apps that record business travel
• Accounting software designed for small businesses
• Spreadsheet templates for simple record-keeping
• Cloud storage for backup and easy access

The right tools can significantly reduce the administrative burden of tax compliance.

Integrating with Accounting Systems

Some drivers benefit from more sophisticated systems:

• Accounting software that integrates with bank feeds
• Automatic categorisation of common expenses
• GST return preparation features
• Financial reporting for business planning
• Professional integration with tax advisors

As your driving business grows, investing in better systems often pays dividends.

Planning for the Future

Scaling Your Driving Business

If you plan to expand your driving activities:

• Monitor your approach to the GST registration threshold
• Plan for the administrative requirements of GST registration
• Consider the cash flow implications of paying GST
• Think about whether additional vehicles or drivers make sense
• Evaluate the business case for expansion

Good planning helps you grow your driving income while maintaining compliance.

Exit Planning

If you decide to stop driving for Uber:

• Complete all outstanding tax obligations
• Consider whether to deregister from GST if applicable
• Maintain records for the required retention period
• Resolve any outstanding issues with Inland Revenue
• Document your final position for future reference

A clean exit helps avoid ongoing complications.

Conclusion

Understanding GST as an Uber driver doesn't have to be complicated. The key is knowing your registration status and understanding how Uber's systems work on your behalf. Whether you're driving casually for extra income or building a substantial driving business, the GST arrangements are designed to make compliance as straightforward as possible.

For most part-time drivers, the system works automatically with minimal effort required. For more serious drivers, GST registration opens up opportunities to claim back GST on business expenses while still benefiting from Uber's simplified collection systems.

The most important things to remember are: keep good records, understand your registration obligations, declare all income for tax purposes, and don't hesitate to seek professional advice if your situation becomes complex. With these foundations in place, you can focus on what matters mostÔÇöproviding great service to passengers and building your driving income.

Remember that tax rules can change, and individual circumstances vary, so stay informed and consider professional advice for your specific situation. The investment in understanding your obligations properly will pay dividends in reduced stress and better financial outcomes.