As an Uber Partner, claiming vehicle-related expenses is one of the most common ways to lower the amount of your income you need to pay taxes on. But how should expenses be calculated? Let’s review some common questions surrounding vehicle expenses.
I have my receipts. What else do I need?
Knowing your mileage is the key to claiming eligible vehicle expenses.
There’s no predetermined “per km” rate for business. It’s a math equation based on your mileage. Km’s driven for business/total km’s driven in the period.
Let’s look at an example:
- Natasha became an Uber Partner in February 2019.
- In order to claim her vehicle expenses on her tax return, she needs to know 2 numbers
- The total km’s she drove for business. In other words, the km’s she put on her car while working as an Uber Partner.
- The total km’s she put on her vehicle since she became an Uber Partner.
#1 is easy. Natasha just has to refer to her Uber Annual Tax Summary. The total km’s driven for business is listed as “On trip mileage”.
Natasha’s on trip mileage is listed as 2,770 km’s.
#2 involves some simple math – but TurboTax Self-Employed users don’t have to worry about complex math equations. It does the work for you.
Natasha will take the starting odometer reading from back in February when she started as an Uber partner and the odometer reading at the end of 2019.
- Natasha recorded her odometer reading on January 1st, 2020. Her vehicle’s odometer showed 65,150 kms.
- The odometer reading from February (when she started driving with Uber) can be found on her Safety Standards Certificate (SSC).
- Back in February, her odometer read 51,650 kms.
- By subtracting her year-end number from her starting number, Natasha determines that her total mileage is 13,500
65,150 -51,650=13,500 (The total km’s driven from February 2019- December 31, 2019)
Now Natasha has both of the figures she needs
- The total km’s she drove for business = 2,770
- The total km’s she put on her vehicle since she became a partner = 13,500.
Why are these figures so important?
These two figures give the percentage of business use needed to claim expenses.
Knowing both your business km’s and your total km’s is necessary to claim your eligible vehicle expenses on your tax return. If you do not have one of these figures, the CRA will likely not allow you to claim any vehicle-specific expenses at tax time such as gas, repairs, insurance, etc. Natasha’s percentage of business use is (2,770/13,500). = 20.5%
- This means that when Natasha enters all of her vehicle-related expenses from February – December 2019, 20.5% may be eligible for business expenses.
- Based on the calculation, she’s deemed to have driven her car 20.5% of the time for business.
- For example, if she spent $1000 on repairs, $205 is likely considered to be a business expense.
Natasha will enter ALL of her vehicle-related expenses from this period. Every eligible gas receipt, every insurance payment, every oil change receipt – all of these amounts from February-December 2019 will be included in her return. Without knowing that 20.5% figure, none of these amounts would be allowable business expenses.
When using TurboTax Self-Employed to prepare your return, instead of multiplying your expenses by percentages, the software does the math. Simply enter your km’s (both business and total) and your totals for gas, repairs, etc. and TurboTax does the hard work for you – down to the last penny.
This content is intended solely for information purposes and no Uber Partner or other third party may rely upon it as tax or legal advice or use it for any other purpose. As such, Intuit assumes no responsibility whatsoever to Uber Partners or other third parties as a result of the use of information contained herein. Readers are encouraged to consult with professional advisors for advice.