A Grab driver by the name of “Jeff ML Chan” published a Facebook post stating that he will be taxed by the Government without receiving any tax deductions on car-related expenses.

According to him, Grab reported his gross income of $38,000 for 6 months to inland revenue and he still needs to pay tax, contribute to Medisave, pay rental, fuel, ERP charges, season parking as well as other parking fees.

Labour MP Ang Hin Kee who advocates for taxi and private-hire drivers, stands firm with the drivers on this issue.

In February, he explained to IRAS/Ministry of Finance on why tax deductibles for rental and fuel expenses should be allowed for private-hire drivers.

He repeated this call in Parliament during the Committee of Supply debate over the last two weeks.

He reasoned that private-hire drivers are now required to obtain a LTA Vocational Licence and they can only serve commuters through bookings by the apps.

Taxi drivers can accept street hires and therefore may achieve more revenue trips a day to cover their cost and have some take-home income.

However, a full-time private-hire driver can only depend on the app to be assigned trip requests. Therefore, they may achieve lesser revenue trips.

Ang also said that private-hire drivers previously could claim tax deductibles since they were required to register a transport company.

But this is no longer the case.

Ang urged Ministry of Finance to allow full-time private hire drivers submit their vehicle rental fees and fuel expenses for tax deduction purposes.

Do the math

Let’s breakdown the cost based on the figure provided by Jeff.

Since Jeff earned $38,000 over 180 days, that means he makes about $211 in revenue a day.

Assuming his daily rental cost is $50 and fuel is about $40, he can take home approximately $110 a day and $3,300 a month.

After deducting his Medisave contributions (10%) and tax (10%), he will take home about $2,500 a month.

So how now brown cow?

Senior Minister of State for Finance Indranee Rajah responded to Ang’s query on tax deduction matters in Parliament.

She said the government’s policy on not allowing private-hire car drivers to claim tax deductions on any car-related expenses will remain unchanged.

This was “in line with the longstanding national car-lite policy”.

However, she noted Ang’s “passionate advocacy” on this issue and said the Government will review their policies to make sure they remain relevant and effective.

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