If you are operating an Uber or a Rideshare business, you need to be aware of your tax obligations under the Income Tax Act 2007.
Income Tax
Like any other independent contractor you are liable for income tax on your profits. Uber and other rideshare companies do not deduct and pay income tax on your behalf therefore you might have a large tax bill at the end of the financial year. You are required to file an individual income tax return (IR3) with IRD, outlining your income and all expenses. For these reasons it may be best to take professional advice even before the end of the financial year.
GST
You only need to register for GST if your gross revenue/turnover is over $60,000 per year, or your prices include GST. However you may register for GST voluntarily. This can be useful in situations where your business is operating at a loss.
According to Uber because of new GST rules effective 1 October 2016, Uber is required to charge an additional 15% GST on the Service Fee to non-GST registered partners. This is why the Service Fee percentage is 28% for non-GST registered partners and 25% for GST registered partners. The advantage is that if you are not GST registered, you will not need to remit 15% GST on your gross trip fares to the IRD
Not sure if you need to register for GST or need to file your tax returns, contact us.
