What you need to know about making money as an Uber driver
On a sweltering day in February, there was not a snowflake's chance in hell I was trudging the 10-minutes from Sydney's Town Hall to Barangaroo to arrive drenched in perspiration for a prospect meeting.
Hmm, what was a less clammy solution to my new business prospecting predicament?
What is Uber?
As most people would know, Uber is a rideshare service that has disrupted the taxi industry. The US-based company has created a free mobile app that allows customers to request a car trip and pay a fixed fare online.
Uber operates in 79 countries and it is becoming an increasingly popular way to travel from A to B for more Australians. One Melburnian took 1219 trips with Uber in 2018, averaging more than three rides a day.
Prices and costs
Returning to my February meeting in Sydney, the trouble was the handiest Uber driver was across the other side of the city.
Once he accepted my fare, it took him 10 minutes to zig-zag through the streets to collect me for the five-minute business commute.
I chose the low-cost ride pooling service uberPOOL but I was his only passenger and the fare ended up being a princely $5.89. I was happy with this result but the driver must pay a 27% clip to Uber, according to the next driver I spoke to for Money.
A spokesperson from Uber failed to confirm this fee, simply saying: "Uber charges partners a service fee on all fares, which covers the cost of the use of Uber's technology, the collection and transfer of fares, credit card commission and the distribution of invoices to riders."
Rather than owning his own car, the next Uber driver I travelled with rents one for $270 a week. Uber-ready vehicles range from $159 to $300 a week for a plan offering unlimited kilometres, while the rideshare service's rental partners include Europcar, Splend, Keyz, Hertz and Thrifty.
On the insurance front, Uber provides some cover that works in tandem with a driver's personal insurance such as compulsory third party (CTP) injury policy. Uber insists this ensures every trip is covered and other road users are protected in the event of an accident.
Simone Gielis, general manager of Etax.com.au, an online tax agent, says Uber drivers can claim their insurance costs as tax deductions, along with other work-related expenses such as registration, repairs, tyres, vehicle maintenance and cleaning costs.
As well, Gielis says they can claim additional expenses that are directly related to becoming, and operating as, an Uber driver, such as registering as a driver, which carries an application fee and medical and police checks.
To claim any work-related deductions, Uber drivers must be vigilant, says Gielis. "When it comes to claiming costs directly related to your vehicle, you'll need to keep a record just like you would for any other job.
"And with all the kilometres you'll be driving, you should keep a logbook. This lets you calculate the work-related portion of your car use, in a way that the ATO respects. Then you can properly claim a wide range of vehicle-related expenses."
She warns that "if you start to drive for Uber without some good tax planning, you could soon have an ATO tax debt in the thousands in the first year - even tens of thousands of dollars".
At a glance
- To be eligible to be an Uber driver you must be over the age of 21 and have held a licence for at least 12 months - P-platers should not apply.
- Your car must be less than 10 years old and pass the regular vehicle inspections.
- If you don't own a car or your vehicle doesn't meet the criteria, you can rent an Uber-ready vehicle, although this service is limited to select cities.
- To rent an Uber-ready vehicle, expect to pay from $159 a week. As part of your research, check for kilometre caps, additional kilometre charges and membership fees.
- If you're prepared to share a car with others and do some walking, the ride pooling service uberPOOL costs up to 50% less than uberX, which is typically Uber's next cheapest service.
- Ola Cabs is a recent market entrant and is attracting attention with very competitive fares.