Uber BV has lodged an application in the Federal Court against the Commissioner of Taxation. The matter concerns the ATO's view on GST in relation to ride-sharing drivers. In May 2015, the ATO released information on its website providing its view of the tax obligations of people providing services in the sharing economy. The ATO was of the view that people who provide ride-sourcing (or ride-sharing) services were providing "taxi travel" under the GST law, and were required to register for GST regardless of turnover, charge GST on the full fare, lodge BASs and report the income in their tax returns. The ATO had given ride-sourcing drivers until 1 August 2015 to obtain their ABN and be registered for GST.
Following the announcement of Uber's court challenge, the ATO updated the guidance on its website (as at 5 August 2015). The ATO affirmed that people who provide ride-sourcing services are providing "taxi travel" under the GST law. The guidance also states that from 1 August 2015 the ATO expects all drivers involved in providing ride-sourcing services to be registered for GST.
The guidance refers to the current court challenge of the ATO's advice. In this regard the guidance states: "Taxpayers often challenge the Commissioner's view but this does not affect our continued administration of the GST law. Similarly, current legal proceedings do also not change the Commissioner's view on our published guidance, therefore the ATO will continue to support and advise impacted drivers on how to demonstrate their compliance with the law and the ATO position."
The guidance also sets out the ATO responses to "what the community is asking" it in relation to ride-sourcing services. In relation to passengers, the ATO notes that if a passenger is running a GST-registered business and the travel is part of running that enterprise, they can generally claim a GST credit for the fare charged. The ATO says that for fares over $82.50 a passenger must hold a tax invoice in order to claim a GST credit. If the passenger doesn't get a tax invoice for a fare of more than $82.50, the ATO suggests that "it would be ideal if you captured the details of the car number plate and advised the ATO via the 'Report a Concern' function on the ATO's mobile phone app."
The ATO set out the following key issues and points in relation to "drivers":
- ABN registration: Drivers can use business industry codes 46239 (Road Passenger Transport) or 46231 (Taxi Service Operation). The ATO also recommends drivers use "ride-sourcing" or "ride-sharing" as their business description.
- Employee or contractor: The ATO considers drivers to be independent contractors instead of employees.
- Small business concessions: In response to the question "Are ride-sourcing drivers eligible for all small business concessions and what deductions can be claimed?", the ATO said, "If you are carrying on a business, and you bought an asset for less than $20,000 (excluding GST) on or after 1 July 2015, you would be entitled to claim an immediate deduction for the asset in your 2015–2016 tax return. If your purchase is used for both business and private use, you can only claim a GST credit or an income tax deduction for the part of the purchase relating to your business use. For example if you use your car 50% for your business, you can claim 50% of the GST on the fuel and other car-related expenses and 50% of the GST-exclusive cost as an income tax deduction. You need to keep records of the income and expenses and how you apportioned for private use."
The ATO has also released a factsheet entitled "Ride-sourcing – the facts", summarising key points on its view of the GST treatment of ride-sharing services. The factsheet is available on the ATO website at https://ato.gov.au/Media-centre/Articles/Ride-sourcing---the-facts/.
Source: ATO website "Providing taxi travel services through ride-sourcing and your tax obligations", last modified 5 August 2015, https://ato.gov.au/Business/GST/In-detail/Managing-GST-in-your-business/General-guides/Providing-taxi-travel-services-through-ride-sourcing-and-your-tax-obligations/.