While Uber and Lyft dominate the United States, the African ride-sharing market is very different. Uber competes with global competitors like Bolt, inDriver, and most recently, Didi. Africa is home to a unique market, forcing innovations like Uber’s Pool Chance, an in-app ridesharing service that lets riders traveling in the same direction split the cost. The African continent continues to see growth for ride-sharing services, with Uber employing about 150,000 drivers across the continent.
Driving for app-based services like Uber, inDriver or Bolt can be an appealing way for people to earn supplemental income all over the world. Increased pay and growing legislative efforts to protect drivers make driving in today’s economy potentially very lucrative. As independent contractors, however, drivers are forced to provide their own cars, pay for their own gas, and maintain their own insurance. These costs can quickly add up, eating into a new driver’s pay.
Offsetting Costs Through Claimed Business Expenses
Luckily, tax laws are set up to allow drivers to claim these costs as business expenses. App-based drivers, small businesses, and big companies that own fleets of corporate vehicles can take advantage of the tax system to offset the costs of their business vehicles. Any money spent on gas, repair, maintenance, or even buying a new vehicle can be used to reduce the income you pay taxes on, keeping money in your pocket. With vehicles used exclusively for your business, this write-off is incredibly easy. If you use your vehicle for both business and personal use, things get a bit more complicated.
Write Everything Down
The best way to ensure you can get the best deal on your taxes is to keep detailed records of everything you do that involves your vehicle. The taxman loves mileage reports, so having a logbook of each drive allows you to accurately make claims and back them up. Keep all of your receipts, but don’t expect to write off everything. Your local tax experts know that the shelf life of gas in your tank is several months, so that trip you took before the gas “went bad” probably should be classified as a personal expense.
Keeping records of your operating expenses isn’t just good for tax purposes, it’s good from a business perspective, too. If you’re not vigilant with keeping records about how and when you spend money, you might not be making as much of a profit as you think. In some cases, gas and maintenance costs can eat into your margins to the point where your business is no longer viable. If this is the case, you’ll want to keep records so that you can identify the problem and come up with an appropriate solution.
Clean Energy Credit
In addition to standard tax write-offs, legislation involving clean energy vehicles can often be used to your advantage. Both Morocco and South Africa offer unique tax situations to electric vehicles. Morocco exempts both hybrids and fully electric vehicles from customs duties, while South Africa actually charges a higher duty on electric vehicles than it does on gas-powered ones. Researching your local tax laws can help keep you aware of tricky situations like these and help you save money on your vehicle purchases.
Even if you’re just using your vehicle for a few hours of app-based driving every week, it’s a good idea to keep thorough records of your business use. This use can be claimed on your taxes as an expense of operating your business, allowing you to reduce your claimed profits and pay less in taxes. As more and more people experiment with gig-based work, split personal / business use of vehicles is likely to become even more common. Keeping records will make filing taxes a breeze and enable you to get the highest possible fair deduction. You’re not going to reduce your maintenance costs to zero, but you can definitely offset the cost of operating your vehicle by a substantial margin.
