Do You Need an ABN for Uber? (2021 Update)
To become a driver for Uber, you will need to first apply for an Australian Business Number (ABN). Find out more in this guide.
The gig economy has become a great way to earn money whilst also working independently. One of the most popular platforms, Uber, allows drivers to choose their own hours and customers. However, it’s not always clear what the legal and tax obligations are. A big part of this is the question of whether you need to obtain an ABN for Uber.
Table of Contents
- Australian Business Numbers (ABN)
- Do You Need An ABN For Uber?
- GST Registration for Uber Drivers
- Independent Contractor vs Employee
- Article Summary
Australian Business Numbers (ABNs)
Every registered business in Australia has an ABN. Whether you’re a sole trader or large company, your ABN is the unique number which identifies your business. Uber drivers are in the unique situation where many aspects of your job may indicate that you’re an employee. However, Uber drivers are considered independent contractors. This means that as an Uber driver, you technically work for yourself. Further, you also have all the obligations that sole traders have.
Do you need an ABN for Uber?
If you are a driver for a ridesharing service, you must register for an Australian Business Number (ABN) and GST. Uber will not accept your application to become a driver if you do not have an ABN. You can easily apply for an ABN online and receive it on the same day.
As a rideshare driver you are considered a sole trader. This means that you are:
- Providing commercial services
- Intending to profit from these services
- Offering your services on a regular basis
GST Registration for Uber Drivers
As an Uber driver, regardless of your income, you must also account for GST on all earnings. Unlike other small businesses such as online stores and market stalls, rideshare drivers do not qualify for the GST registration threshold of $75,000. This means that if you only make $5 total as a driver, you will need to register for GST and declare the income on your tax return. Drivers are also entitled to a range of tax credits and can claim the expenses related to providing their rideshare services.
Example GST Calculation
You receive a $55 fare from a passenger which includes GST. The GST you pay on this is one-eleventh of the total amount paid by the passenger. Therefore in this scenario, the GST you have to declare and pay is $5. The amount the company gives you after taking their cut from the $55 fare is not the number used to calculate GST.
GST only applies in Australia. If your ridesharing service is based overseas, certain payments can be exempt from GST. Examples of this include bonus payments for referring new customers.
Independent Contractor versus Employee
At present, rideshare drivers are considered independent contractors based on a range of factors. These include the driver’s ability to choose their own hours, personal ownership of the vehicle and also which rides they accept. For further information, you can read our previous guide on the difference between an employee and independent contractor.
Yes, as an Uber driver you are required to register for an ABN. In Australia, all drivers for ridesharing services are deemed as independent contractors and, thus, have the same legal obligations as a sole trader business structure.
Further, as an Uber driver you do not qualify for the GST Threshold of $75,000. Hence, meaning that you must calculate and pay your own GST to the Government.
Zac is a consultant at Lawpath, Australia’s largest and fastest growing online legal platform. Since joining Lawpath, Zac has assisted 1000s of startups and small business’s with their legal needs.