Uber vs the ATO: GST and Ride-Sourcing
Editor’s note: This article was written in 2015, when Uber’s GST treatment was still before the courts. That case has since been decided: the Federal Court upheld the ATO’s position, and drivers providing ride-sourcing services must register for and charge GST regardless of turnover, as well as declare their driving income. The commentary below is retained as it was originally published. For advice on the tax treatment of ride-sourcing or other gig-economy income today, please book a consultation.
As a tech-loving geek who’s lived and worked as an Aussie expatriate in the heart of tech heaven — Silicon Valley — I’ve tested, tried and fallen in love with a myriad of innovative apps, and none more so than Uber.
As a former startup tech-company founder, I love that Uber solves the many problems and frustrations of dealing with regular taxis — things that every expat has experienced before (any expat based in Malaysia knows these problems all too well).
Things like quality of service, quality of vehicles, reliability, price, visibility and — importantly — driver and passenger security, all because of a mobile phone app.
But as an accountant and expat who travels to different cities regularly, I love that Uber solves the problem of recording my travel expenses. How good is it that Uber delivers the receipt, along with all the details of your trip, directly to your email within minutes of exiting the vehicle? Perfect for maintaining travel expense records for your business or your employer.
Although I and many others love Uber, many governments do not. Uber has shaken up the world’s taxi industries and hasn’t won too many friends in government or the industry — and this is where one of the problems lies. Aside from the potential loss of taxi-licence revenue, governments around the world have not been able to keep up with the pace of technology and so haven’t specifically dealt with the tax issues of drivers in the new ride-sharing economy.
But in a recent ATO publication, the Australian Taxation Office stated that Uber drivers fall under a broad definition of “taxis” as defined by Australia’s GST Act.
The ATO went further, stating that drivers would also be required to include the income they earn from driving for Uber in their personal tax returns.
So what does this mean? In the short term, it means that — although Australia’s Uber fares are already higher than in many other countries — expats returning to Australia will find that Uber fares have risen disproportionately compared with elsewhere, due to the imposition of GST.
But this is where things get interesting, because (as the headline to this post alludes) Uber has taken the gloves off and filed an action against the ATO in the Federal Court.
It’s too early to determine the outcome, but we’ll be watching this case with interest. Stay tuned!
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