Australia's Taxation Office has issued a guidance note titled “Providing taxi travel services through ride-sourcing and your tax obligations” that makes it clear Uber drivers need to register for, collect and pay the nation's goods and services tax (GST).
The note coins the term “ride-sourcing” and defines it as “an ongoing arrangement where”:
- ”you (a driver) make a car available for public hire
- a passenger uses, for example, a website or smart phone app provided by a third party (facilitator) to request a ride, and
- you use the car to transport the passenger for payment (a fare) with a view to profit.”
And here comes the stinger for ride-sourcers:
”If you provide ride-sourcing services, you are providing ‘taxi travel’ services. This is because you make a car available for public hire and use it to transport passengers for a fare.
Under the GST law, if you carry on an enterprise and you provide taxi travel services in that enterprise you are required to be registered for GST regardless of your turnover.”
That's a nasty requirement because Australian businesses that turn over under AU$75,000 a year don't have to register for GST and are therefore spared quarterly paperwork and the chore of setting aside the tax and forwarding it to government. Ride-sourcers will also have to prove how much of their time on the road is spent providing taxi services if they wish to claim a credit on GST.
It's also nasty for Uber, for two reasons. The first is that the ATO has given ride-sourcers an August 1st deadline to get their GST affairs in order, which means Uber has some back office work to do in a hurry. The other hassle for Uber is that it currently manages to get away with saying its transactions effectively take place offshore so don't incur GST. Once its drivers are required to register for GST, Uber will either have to eat the price rise the tax will bring – and the competitive slug – or go rogue again. Doing so probably isn't an option unless Uber wants to be accused of astounding hypocrisy to go with its general skulduggery: the company has been telling Australian authorities they should loosen regulations to allow it to compete hereabouts. Arguing it wants access to Australia's market without being subject to Australian tax laws would require amazing chutzpah, even for Uber! ®
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