It is the time of the year again to file your income tax!
Filling your income tax as a self-employed private hire driver is very different to a full-time salaried worker.
Many drivers who have joined private hire car operators such as Grab, Gojek, Ryde, and Tada to supplement or replace their income may need to file their income tax as self-employed person for the first time.
Here are some frequently asked questions (FAQs) on tax filing for Go-Jek and Grab Drivers.
Are Go-Jek/Grab drivers required to file taxes?
Yes, all drivers, regardless of whether you are full-time, part-time, ad-hoc or one-off drivers, are required to declare.
If you are employed as a driver under a limousine company, check with the company if they are under the auto-inclusion scheme or if they have filed for you
Drivers who opted-in to the auto-filing scheme where the ride-hailing company will file their earnings with IRAS directly will only need to log in to the IRAS myTax portal and confirm if the earnings are correct.
Income from Social Carpooling such as GrabHitch
For private-hire drivers who provide social carpool services such as GrabHitch and Ryde, on top of providing regular chauffeured ride services, are required to pay taxes on income derived from social carpooling.
Private-Car drivers who provide social carpool trips and adhere to the conditions set out in the Road Traffic (Car Pools) Exemption Order, such as not making more than 2 social carpool trips a day and the amount collected for each carpooling trip does not exceed what is required to cover the costs incurred to make that trip, the income is not taxable.
What can I declare as expenses?
The changes to the Income Tax Act were passed in Parliament on 2 October 2018. Private-hire drivers will be allowed to claim tax deductions on car-related expenses.
Previously, private-hire drivers were subjected to taxes on their gross earnings. Major expenses like petrol, rental cost and maintenance cost were not allowed as expenses for tax-deduction.
What does it mean for Private-Hire Drivers?
Private-hire Drivers will be able to enjoy the same tax treatment as their taxi counterparts to enjoy car-related expenses. 60 per cent of the income derived from driving can be considered as expenses.
For example – Drivers who make $70,000 in fares and incentives will be able to declare $42,000 as car-related expenses. The taxable amount will become – $70,000 – $42,000 = $28,000.
How Much Tax Do I Have to Pay?
The amount of tax depends on the tax bracket you are in. The more you earn, the more you pay!
The taxable amount for private-hire drivers is the net trade income. Net trade income is the gross earnings minus allowable business expenses.
Private-hire drivers are allowed an expense ratio of 60% of gross income.
Simplify it – If you made $100,000 in fares, incentives etc, you are allowed to declare 60% as expenses. The net trade income will be $100,000 X 40% = $40,000
Tax payable on $40,000 = $550
When is the deadline
The paper filing dateline is 15 April 2023, E-Filing dateline is 18 April 2023.
How and Where to File
If you have opted in for auto-inclusion with Grab and Go-Jek, the platforms would have submitted your earnings information to IRAS. You just need to log in to the IRAS tax portal, acknowledge and click on submit before the deadline.
In case you are driving for multiple platform operators but did not opt-in to all of them, you will have to manually enter your earnings from the platforms that you did not opt-in for.
For those who did not choose to opt in and prefer to leave their personal taxes in their own hands, they can e-file manually themselves.
- Fees paid to booking service operators such as Grab and Go-Jek
- Mobile phone data bills incurred in the course of providing driver service.
- Taxi Driver’s Vocational Licence (TDVL) and Private-Hire Car Driver’s Vocational Licence (PDVL) renewal fees
- Vehicle-related expenses such as rental, petrol/charging, road tax, car insurance, car wash charges, car loan interest, repairs and maintenance expenses, parking charges
These expenses must be incurred during the course of providing the service. Your own HDB season parking charges are not tax deductible.
For the benefit of the doubt, traffic fines are also not tax-deductible.
Keeping proper daily records and retaining all supporting documents, such as receipts and statements issued by the platform operators for 5 years from the YA to which the claim relates, is necessary if you are claiming actual expenses.
Covid-19 Relief Payout
Are the Government SRF payouts taxable?
You don’t need to pay taxes on the government SRF payouts and CDRF payouts you received, as they are intended to provide financial assistance to you during the COVID-19 pandemic.
Are the additional support from the operators taxable?
Additonal support received in the form of bank transfer or e-wallet credit, reduction in taxi rental fee is taxable.
Manual filing can be very tedious and you can make mistakes easily. Make your life easy and opt-in for the auto-inclusion with all the platforms you drive for.