This is a guest post contributed by Ling.
There are more than 40,000 private-hire drivers hitting the road every day and they will soon have to pay tax once e-filing is available.
Uber and Grab entered Singapore in 2013 and for the past four years, drivers, especially those who drive on a part-time basis, didn’t have to worry about taxes.
According to Uber, 60 to 70 percent of riders in 2016 pay by cash as they are mostly blue-collared workers so they don’t have credit cards.
But even if private-hire drivers accept cash fares, their earnings are all recorded in the app.
So it was a matter of time before the IRAS came after them. Drivers will not be able to under-declare or avoid paying tax.
Here’s what you need to know about paying tax as a private-hire driver.
How much tax will you pay? We do the math for you
Assuming that an average uber driver drives 100 trips a week and earns on average $10 per trip, he would make $4,000 a month and $48,000 a year.
He would then be taxed $550 for the first $40,000 and another 7% on the next $40,000 (which is $8,000 in this example). The total tax amount should be $1,100.
If the driver claims personal relief such as earned income relief, child relief and parent relief, the taxable payable can be deducted further.
After all the necessary deductions, he would only need to pay $370 instead of $1,100.
Use this tax calculator to gauge how much tax you need to pay.
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Forms that you should be looking at
Whether you’re a full-time or part-time Grab/Uber driver, you are considered a self-employed person.
If you are earning less than $100,000 a year, you only need to submit the standard Form B and fill up the section under “Trade, Business, Profession or Vocation”.
As a Grab driver, you may be able to include some allowable deductibles such as credit wallet deductions and admin charges and declare as “business expense”.
Unfortunately, private-hire vehicle expenses such as petrol, car rental fee, ERP expenses are not tax-deductible. Yes, even if your private car is used for business purposes.
Taxi drivers, on the other hand, operate a public-service vehicle that is used to ferry passengers only so they get to deduct rental of the taxi, diesel, parking fees, vehicle washing and ERP expenses.
Let’s hope that IRAS can reconsider the deductible expenses for private-hire vehicles.
As pointed out by the National Private Hire Vehicles Association (NPHVA), “One possibility is to explore tax deductibility based on the mileage clocked on private-hire driving as practised overseas”.
NPHVA believes that private-hire vehicles should be taxed in a fair manner like other businesses of a similar nature and is ready to discuss with IRAS on this.
Tax filing might be easier in the future
IRAS is working with Uber and Grab to make it more convenient for drivers with pre-filing of their income information in their electronic tax form.
This means that drivers don’t have manually compute their revenue which includes cash incentives, free credits and referral incentives.
This will be a lot more convenient for private-hire vehicles but it also means that they won’t be able to dodge the taxman or under-declare their income.
Convenience is one thing but at the same time, you cannot play cheat liao.
Grab is currently helping drivers with tax issues
But, what about Uber? Right now, the company has not provided any form of information regarding tax filing. Yet.
But they’re likely doing something about it. You’ll notice that they have a job opening for “tax specialist” in its Singapore office.
Grab has an entire web page that explains what their drivers need to know about tax filing. This is certainly helpful for drivers who are clueless about this issue.
Let’s hope that Uber can be more proactive in helping their drivers adhere to Singapore regulations.
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This article was first published on goodyfeed.com
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