As an Uber, DiDi, or rideshare driver in 2026, your car is your primary income-generating asset. Because rideshare drivers operate under an Australian Business Number (ABN) as sole traders, claiming your vehicle expenses correctly is the most powerful way to lower your taxable income and keep more of your rideshare earnings.

The Australian Taxation Office (ATO) uses advanced data-matching technology to track rideshare income directly from digital platforms. To stay compliant and maximize your deductions, you must understand the rules of the road for the 2025–26 tax year.

1. Choose Your Tax Deduction Method

The ATO offers two distinct methods for calculating and claiming your vehicle expenses. For almost all rideshare drivers, one method yields a much larger return.

Method A: The Logbook Method (Recommended for Maximum Savings)

If you drive frequently, this method allows you to claim the exact business-use percentage of all your actual car running costs.

• How it works: You must maintain an ATO-compliant logbook for a continuous period of at least 12 weeks. This logbook establishes your “Business Use Percentage,” which applies to your vehicle expenses for the entire financial year.
• What you can claim: Fuel/electricity, vehicle servicing, registration, comprehensive insurance, tyres, cleaning, car loan interest, and instant asset write-off or depreciation (up to the legislated 2025–26 car limit of $69,674).
• Validity: Once written, your 12-week logbook remains valid for five years, provided your driving patterns do not drastically change.

Method B: The Cents-per-Kilometre Method (Simple but Limited)

If you only drive rideshare occasionally as a minor side hustle, this option offers simplicity but heavily caps your return.

• The 2025–26 Flat Rate: You can claim a flat 88 cents per kilometre traveled for business purposes.
• The Hard Cap: This method is strictly limited to a maximum of 5,000 kilometres per year (resulting in a maximum capped deduction of $4,400).
• The Trap: This flat 88c rate is intended by the ATO to cover everything—fuel, insurance, deprecation, and maintenance. You cannot claim individual receipts on top of this rate.

2. What Counts as “Rideshare Kilometres”?

Distinguishing between personal, commuting, and business driving is where many drivers get audited.

• CLAIMABLE (Business Use):
  • Driving to pick up a passenger after accepting a trip on the app.
  • The duration of the trip with the passenger in your vehicle.
  • Driving around while actively logged into the app waiting for a trip request.
  • Travel from your last passenger drop-off back to your home base (if you are still logged in and available for work).
• NON-CLAIMABLE (Private Use):
  • Driving to the grocery store or running personal errands, even if the Uber sticker is on your window.
  • Driving your car while the app is completely turned off.

3. Crucial Record-Keeping Requirements

If you choose the Logbook Method to maximize your deductions, your records must be completely bulletproof. If the ATO requests an audit, a sloppy ledger will result in your deductions being wiped out.

A Compliant Logbook Entry Must Include:

1. The specific date the work-related trip occurred.
2. The odometer reading at the start of the shift/trip.
3. The odometer reading at the end of the shift/trip.
4. The exact total kilometres traveled during that block.
5. A clear, specific description of the business purpose (e.g., “Uber driving shift – Melbourne CBD”—simply writing “Work” or “Business” is no longer legally acceptable).

Pro Tip: Keep an odometer reading on 1 July and 30 June every year. Even during years 2 through 5 of using an existing logbook, you must record your opening and closing financial year odometer figures to substantiate your total annual mileage.

Rideshare Expense Comparison Matrix