What the 2026 Budget Means for Rideshare Drivers

In short: For Australian rideshare drivers, the 2026-27 Budget made the $20,000 instant asset write-off permanent from 1 July 2026 (now law), covering in-car gear but usually not the car itself. The new $1,000 flat deduction doesn't apply to rideshare income, so claim your expenses as usual. Platforms report your earnings to the ATO, which matches them against your tax return.

If you drive for Uber, Didi or any other rideshare platform, here's what the 12 May 2026 federal budget 2026 rideshare changes actually mean for your tax bill. Most of the budget coverage focuses on cost-of-living relief and housing, but three issues matter to rideshare drivers directly, and two of them could cost you money if you get them wrong. Here's the plain-English rundown.

For a full picture of what you can already claim, start with our complete guide to tax deductions for rideshare drivers in Australia.

Disclaimer: This article provides general information only and does not constitute tax advice. Consult a registered tax agent for advice specific to your circumstances.

The Three Changes That Matter Most for Rideshare Drivers

Three things around the 2026-27 Budget matter to rideshare drivers. First, the $20,000 instant asset write-off (IAWO) is now permanent, which is good news if you spend money on in-car gear. Second, a new $1,000 flat work-related deduction replaces itemising for some employees, but it doesn't apply to rideshare income at all. Third, the ATO's compliance funding is still ramping up ($75.7 million over four years from 1 July 2025 for personal income tax compliance, set in the 2025-26 Budget), and platform income is easy for it to check. Each of these is unpacked below.

Permanent IAWO: In-Car Gear Under $20k

The instant asset write-off threshold of $20,000 has been made permanent from 1 July 2026 (the change is now law), removing the annual uncertainty that had plagued small business planning for years (Budget Paper No. 2, 2026-27). For rideshare drivers who operate as sole traders (which is most of you), this means any individual asset used in your driving that costs less than $20,000 can be written off in full in the year you buy it, rather than depreciated over several years.

What does that look like in practice? Think dash cams, phone holders, in-car charging stations, GPS units, premium floor mats, a portable vacuum for keeping the cabin spotless, or a car-mounted tablet. If you've been eyeing a $400 dash cam or a $250 wireless charging pad to wire into your centre console, FY2026-27 is the time to buy it: the business-use share of the cost comes straight off your taxable income in one hit.

The important caveat: the car itself almost certainly doesn't qualify. New vehicles easily exceed $20,000, and even a second-hand car used for rideshare will often tip over the threshold. The car is also subject to the luxury car cost limit, which caps the depreciable value regardless of what you paid. The IAWO benefit for rideshare drivers sits firmly in the accessories and equipment category, not the vehicle itself. For more detail on how the permanent IAWO works and who qualifies, see our post on the permanent instant asset write-off from the 2026 Budget.

The strategic move here is timing. If you've been putting off upgrading your in-car tech setup, do it in FY2026-27 and keep the receipts. One purchase on 1 July and you're claiming the full amount at tax time.

$1,000 Flat Deduction: Not for Rideshare Income

One of the headline announcements from the 2026-27 Budget was a new $1,000 flat work-related expense deduction (the ATO calls it the standard deduction). The idea is simple: instead of gathering and itemising every receipt for work-related costs, eligible employees get $1,000 without any substantiation at all. For someone with minimal deductions, say an employee who occasionally works from home, this is genuinely useful.

For rideshare income, it doesn't apply. The standard deduction only covers labour income such as salary and wages. Rideshare earnings are business income from providing services through a digital platform, and the ATO says expenses for that income are claimed as usual, separately from the standard deduction. If you also have a job, the ATO applies the $1,000 to your wage income automatically, and your rideshare expenses are claimed on top as business deductions. Either way, itemising is how you claim your rideshare costs, and the numbers add up fast.

Run the numbers. The cents-per-km rate is 88 cents per business kilometre for FY2025-26 and 91 cents for FY2026-27, capped at 5,000 km. A driver doing a modest 200 km per week for ridesharing puts on roughly 10,400 rideshare kilometres across a year. Apply the 5,000 km cap and the 88-cent rate, and you're already at $4,400 in vehicle deductions ($4,550 at 91 cents) before you've claimed a single other expense. Even if your actual rideshare kilometres are lower, say 120 km per week, 50% of which is business, you're still looking at 3,120 km, which is $2,746 just from the cents-per-km method.

Now add the rest: the work-related portion of your phone plan, the platform service fees Uber or Didi deducts from your earnings, car cleaning (a $20 wash every two weeks is $520 per year, claimable under the logbook method; the cents-per-km rate already covers it), passenger water and snacks, and any in-car gear you write off. Those costs alone can pass $1,000 before you even touch vehicle costs.

The one scenario where the flat deduction matters to you is if you also have a job: the ATO applies it to your wage income automatically, and it doesn't reduce your rideshare deductions. Our post on flat $1,000 vs itemising: which deduction wins? has a worked decision framework for employees you can run through in a few minutes.

The practical rule for rideshare drivers: itemise. Always.

ATO Data-Matching Crackdown

This is the one that catches drivers off guard. The ATO's Sharing Economy Reporting Regime requires platforms (Uber, Didi and others) to report driver earnings directly to the ATO. This has been in place for ride-sourcing platforms since 2023, and the ATO cross-references that data against what you lodge on your tax return.

The ATO's Personal Income Tax Compliance Program was extended with $75.7 million over four years from 1 July 2025 in the 2025-26 Budget, and the 2026-27 Budget adds $86.3 million for counter-fraud work. What this means in plain terms: if your platform paid you $38,000 last year and you declared $32,000, the ATO can spot the $6,000 gap when it matches your return against the platform's report.

Do not try to hide platform income. The platform reports your earnings to the ATO, and the ATO matches that data against the income in your return. Reporting less than the platform's figures without a legitimate reason (such as a GST adjustment or a genuine error in the platform's figures) is a red flag, not a shortcut.

The more common (and more forgivable) mistake is drivers not reconciling platform earnings against their bank deposits. Platforms pay weekly or fortnightly, and the net amount hitting your account already has service fees deducted. Your gross earnings (what the platform reports to the ATO) are higher than your bank deposits. Work out your declared income from the gross figures on your annual tax summary from the platform, not your bank statements. The one amount to leave out is the GST included in your fares, which you pay to the ATO and which isn't assessable income.

For a full breakdown of the ATO's enforcement expansion, see our post on the ATO shadow economy crackdown from the 2026 Budget.

Vehicle Deductions Still Cents-Per-KM or Log Book

Nothing in the 2026-27 Budget changes your two options for claiming vehicle expenses, and the cents-per-km rate is 88 cents for FY2025-26 and 91 cents for FY2026-27. Here's how the two methods sit side by side:

Cents-per-km method: Multiply your business kilometres by 88 cents (91 cents for FY2026-27). No receipts required: you just need to be able to explain how you calculated the distance. Capped at 5,000 business kilometres per year, so the maximum claim is $4,400 ($4,550 for FY2026-27). Simple, but capped.

Log book method: Keep a log book for at least 12 continuous weeks, recording each rideshare trip (date, odometer readings at the start and end, kilometres and purpose) plus the odometer readings at the start and end of the log book period. This establishes your business-use percentage. Apply that percentage to all actual running costs for the full year: fuel, registration, insurance, servicing, tyres, car loan interest, and depreciation. No cap on kilometres. A valid log book runs for five years if your driving pattern stays reasonably consistent.

For most drivers doing rideshare regularly, the log book method delivers a substantially larger deduction. A driver putting 30,000 km on the car annually with 70% business use can claim 70% of all running costs, often $8,000 to $12,000 or more depending on the vehicle, versus a maximum of $4,400 ($4,550 in FY2026-27) under cents-per-km.

If you haven't kept a log book before, start now rather than waiting for 1 July. The 12-week period can run past 30 June as long as part of it falls in the income year you're claiming for, so a log book you start before the end of the year can still support that year's claim if it reflects your usual driving. Use our cents-per-km calculator to see how the methods compare for your situation.

For the full ATO breakdown on vehicle and travel expense deductions, see our vehicle travel expense deductions guide.

What Hasn't Changed

It's worth naming what the Budget left alone, because there was a lot of noise in the financial press after Budget night:

• GST registration for rideshare: You must register for GST regardless of your turnover. Rideshare driving is classified as taxi travel under the GST Act, and the $75,000 threshold that applies to other businesses does not apply to you. This has not changed and is not changing.
• Cents-per-km rate: No Budget change. The ATO's rate is 88 cents per business kilometre for FY2025-26 and 91 cents for FY2026-27.
• WFH rate (70 cents per hour): Irrelevant to most rideshare drivers, because you're working from a vehicle, not a home office.
• The log book rules: Unchanged. Still 12 consecutive weeks, valid for five years, same business-percentage calculation.

Action List for Rideshare Drivers

1. Log every in-car gear purchase under $20,000. Dash cam, phone holder, charging pad: from 1 July 2026, the business-use share of the cost is deductible in the year you start using it, under the permanent IAWO. Keep the receipts.
2. Check your platform earnings before you lodge. Download your annual tax summary from the platform and check it against your own records; the platform reports your earnings to the ATO as well. If the figure looks wrong, contact the platform's driver support before lodging, not after.
3. Start a log book if you haven't got one. Even mid-year. Set up a simple spreadsheet or use the ATO's myDeductions app for now. You'll need 12 consecutive weeks to establish your business-use percentage for FY2026-27.
4. Reconcile platform earnings against bank deposits monthly. Your gross income (what the ATO sees) is higher than your net deposits. Make sure you're declaring the right number.
5. Itemise your rideshare deductions. The flat $1,000 doesn't cover rideshare income, so your vehicle, phone and platform costs only count if you claim them. Run the numbers for your situation using our calculator.
6. Check the for gig workers page for tools and guides specific to your working situation.

Frequently Asked Questions

Does the permanent IAWO help rideshare drivers?

Yes, for assets under $20,000 used in your driving: dash cam, phone holder, in-car charging upgrade, GPS device, floor mats, portable vacuum. The car itself usually exceeds the $20,000 threshold and depreciates under standard rules subject to the car cost limit, so the IAWO benefit is in your accessories and equipment, not the vehicle.

Should rideshare drivers take the $1,000 flat deduction?

It doesn't apply to rideshare income. The flat $1,000 covers labour income such as wages, and rideshare earnings are business income, so you claim your rideshare costs as business deductions. Vehicle expenses alone (cents-per-km multiplied by your business kilometres) typically exceed $1,000 well before you add phone costs, platform fees or passenger supplies. If you also have a job, the ATO applies the $1,000 to your wage income automatically.

Does the ATO know my rideshare income?

Yes. Major rideshare platforms report driver earnings directly to the ATO under the Sharing Economy Reporting Regime. The ATO's personal income tax compliance funding ($75.7 million over four years from 1 July 2025, set in the 2025-26 Budget) keeps that data matching active. The ATO compares the platform's report with the income you declare, so report your full earnings.

Is the cents-per-km rate changing?

Not through the Budget. The ATO sets the rate each year: 88 cents per business kilometre for FY2025-26 and 91 cents for FY2026-27, for up to 5,000 business kilometres. The Budget did not propose any changes to vehicle expense deduction rates or methods.

Should I keep a log book?

If you drive more than 5,000 kilometres for ridesharing in a year (which most regular drivers do), the log book method will almost certainly deliver a larger deduction than the capped cents-per-km method. The log book is valid for five years if your driving pattern stays broadly consistent. Start one now even if you're mid-year; it positions you for a full year's claim from 1 July.

What happens if I don't declare rideshare income?

ATO data-matching from platform reporting will identify the discrepancy. Penalties for under-reporting range from 25% to 75% of the shortfall tax, depending on whether the ATO considers the omission a failure to take reasonable care, recklessness or intentional disregard. Voluntary disclosure before an audit commences reduces penalties significantly, so contact the ATO or a registered tax agent if you have prior years to correct.

Rideshare drivers lose more deductions to forgotten receipts than to anything else in the tax system. Every car wash, every petrol fill (under the logbook method), every bag of mints for your passengers: those are real deductions that disappear the moment the receipt does. Taxr's AI scanner captures them in seconds: point your phone at the receipt, and the date, amount, vendor, and GST are logged automatically. No shoebox. No spreadsheet. No scramble at tax time. Download Taxr and stop leaving money on the road.