Not surprisingly, the ATO has moved quickly to state its views on the implications of the recent Federal Court decision regarding Uber. The Court held that the UberX service supplied by the ride-sharing network's drivers constitutes the supply of "taxi travel" within the meaning of s 144-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act), effectively meaning that Uber drivers need to register for GST.
The ATO agrees that ride-sharing (also known as ride-sourcing) is taxi travel within the meaning of the GST law. As a result, the ATO says taxpayers who provide ride-sharing services must:
- keep records;
- have an Australian Business Number (ABN);
- register for GST, regardless of how much they earn (that is, the $75,000 GST turnover registration threshold does not apply – drivers must register from dollar one of their ride-sharing income);
- pay GST on the full fare amounts received from passengers;
- lodge activity statements; and
- include all income from ride-sharing in their tax returns.
The ATO says drivers are entitled to claim income tax deductions and GST credits (for GST paid) on expenses apportioned to the ride-sharing services they supply. Where the ATO's data-matching activities identify people who provide ride-sharing services, it will write to them to explain their tax obligations.
Source: ATO, Ride-sourcing is taxi travel, 17 February 2017, https://www.ato.gov.au/Tax-professionals/Newsroom/Your-practice/Ride-sourcing-is-taxi-travel/.