Uber to charge GST on all trips

[Freq Flier 2013]

No GST-free ride for Uber warns Australian Tax Office | smh.com.au

Is this a money raising exercise for the government or just putting uber on a level paying field?

 

[RooFlyer]

No GST-free ride for Uber warns Australian Tax Office | smh.com.au

Is this a money raising exercise for the government or just putting uber on a level paying field?

Its both. Are they providing a taxable supply? Yes, no question. So charge GST and pass it on to that nice Mr Hockey.

 

[Freq Flier 2013]

Its both. Are they providing a taxable supply? Yes, no question. So charge GST and pass it on to that nice Mr Hockey.

But if income is less then 75,000 then generally don't need to pay gst. Only have a valid abn?

 

[Daver6]

Very reasonable. Service is being provided in Australia, pay 10% GST.

 

[RooFlyer]

But if income is less then 75,000 then generally don't need to pay gst. Only have a valid abn?

Sounds right, but an accountant could clarify ( my Batchelor of Bush Accounting has its limitations )

 

[medhead]

But if income is less then 75,000 then generally don't need to pay gst. Only have a valid abn?

Except for taxi drivers who are ALL required to register for gst regardless of income. Been that way since day 1, due to being a high risk black economy industry.

For another taxi chestnut, I wonder how the ATO collects 10% of exchange of "services" for taxi fares.

 

[dajop]

Will be interesting where this all ends up. I guess the argument centres around whether uber is providing the transport service, or just providing a service that links the driver to the passenger.

Thinking through the logic of this (and putting aside the discussion around that all taxis are required to pay GST) ...

Looking at it from a customer perspective, the customer is paying uber to provide a service to get from A to B. The invoice is issued by Uber, credit card statement logs vendor as Uber. If there any complaints, the customer deals with Uber. Irrespective of the arrangements Uber has in place with individuals to provide that service, IMHO GST should be levied on that service. Are the drivers employees or subcontractors? If employees they should be issued group certificates. If subcontractors then if they earn <$75K then they don't need to charge GST, but if they earn >$75K then they should charge GST to Uber, which should be treated the same as GST on any business input.

What are the GST arrangements on courier companies? When you think about it Uber is merely a courier company, that that organises and charges for delivery of packages from point A to Point B using a network of subcontractors. The main difference is that the packages are people, not physical packages (SLF if you like )

I'm all for Uber providing competition to the taxi industry. But I think it is morally wrong that these services be considered exempt from GST.

 

[burmans]

Will be interesting where this all ends up. I guess the argument centres around whether uber is providing the transport service, or just providing a service that links the driver to the passenger.

Thinking through the logic of this (and putting aside the discussion around that all taxis are required to pay GST) ...

Looking at it from a customer perspective, the customer is paying uber to provide a service to get from A to B. The invoice is issued by Uber, credit card statement logs vendor as Uber. If there any complaints, the customer deals with Uber. Irrespective of the arrangements Uber has in place with individuals to provide that service, IMHO GST should be levied on that service. Are the drivers employees or subcontractors? If employees they should be issued group certificates. If subcontractors then if they earn <$75K then they don't need to charge GST, but if they earn >$75K then they should charge GST to Uber, which should be treated the same as GST on any business input.

What are the GST arrangements on courier companies? When you think about it Uber is merely a courier company, that that organises and charges for delivery of packages from point A to Point B using a network of subcontractors. The main difference is that the packages are people, not physical packages (SLF if you like )

I'm all for Uber providing competition to the taxi industry. But I think it is morally wrong that these services be considered exempt from GST.

I think you sum it up pretty well except for that last sentence. Whether this service is considered exempt is first and foremost a legal question, as my lawyer friend is keen to point out, the law should not be confused with morality or justice. (And thats perhaps why that sentence says friend not friends, while this statement is undoubtedly true, the ease with which this is accepted by lawyers without objetction pains me somewhat).

On the employee vs sub-contractor question this is of course a tricky one but in my view in this case I'd go fairly clearly on the sub-contractor side. They provide their own tools of trade, they can work which hours they want, they can choose whther to accept individual fares etc. In the industry I'm closest too (IT) there are plenty of contractors I personally think are closer to employees under the ATO definitions and they get away with it, I dont think ATO would be pushing the employee line here.

 

[puppysparkes]

So considering the proposed tax benefits in the new budget, does that mean an uber driver can purchase a new car up to 20K and claim it as a tax deduction?

 

[medhead]

Will be interesting where this all ends up. I guess the argument centres around whether uber is providing the transport service, or just providing a service that links the driver to the passenger.

Thinking through the logic of this (and putting aside the discussion around that all taxis are required to pay GST) ...

Looking at it from a customer perspective, the customer is paying uber to provide a service to get from A to B. The invoice is issued by Uber, credit card statement logs vendor as Uber. If there any complaints, the customer deals with Uber. Irrespective of the arrangements Uber has in place with individuals to provide that service, IMHO GST should be levied on that service. Are the drivers employees or subcontractors? If employees they should be issued group certificates. If subcontractors then if they earn <$75K then they don't need to charge GST, but if they earn >$75K then they should charge GST to Uber, which should be treated the same as GST on any business input.

What are the GST arrangements on courier companies? When you think about it Uber is merely a courier company, that that organises and charges for delivery of packages from point A to Point B using a network of subcontractors. The main difference is that the packages are people, not physical packages (SLF if you like )

I'm all for Uber providing competition to the taxi industry. But I think it is morally wrong that these services be considered exempt from GST.

All of those issues where considered when the ATO made their determination about taxi drivers. The payment processing system is very much the same when it comes to card payment, in that the taxi owner/operator is being paid by the passenger. The only difference being that taxi drivers also accept cash, on behalf of the owner.

My reading of this is that the ATO is apply the same principles to uber. I know that my dad always had the dream to run his taxi on a true employer/employee relationship with the drivers. Eg provision of super, annual leave etc. But that is pretty much impossible to do profitably. I doubt any other similar service could achieve such a structure.

 

[medhead]

Sorry about spelling. App not letting me edit

 

[dajop]

All of those issues where considered when the ATO made their determination about taxi drivers. The payment processing system is very much the same when it comes to card payment, in that the taxi owner/operator is being paid by the passenger. The only difference being that taxi drivers also accept cash, on behalf of the owner.

Purely from a customer perspective (i.e. what the customer sees), it is pretty clear for taxis, whether you are paying via a payment processing system or cash you are paying to the owner. With Uber it is not so clear, it seems you are paying uber for the service. In reality, uber I am sure are arguing they are just a processing system. So in effect they are acting like cabcharge, so as a minimum ... should GST be payable on the processing fee they charge drivers for connecting them to passengers and collecting payment, irrespective of whether drivers charge GST or not?

One thing is certain that regulatory and taxation systems are evolving much slower than many business models.

 

[medhead]

The analogy with taxis requires uber to assume the taxi owner/operator role. I'm not saying whether that is right or wrong, just that is required to make the analogy work.

As an aside I was looking into getting a taxi plate today and was surprised that there are 4 ownership options in Queensland. Rather complex.

 

[lovestotravel]

So UberX is an illegal service in Australia
Yet the ATO wants to claim 10% GST

Seems to be legal then and the taxi industry can now shut up and go away

 

[yohy?!]

Likely going to backfire on the taxi industry ... Uber has deeeep pockets, probably just drop fares further in a price war

 

[Freq Flier 2013]

Likely going to backfire on the taxi industry ... Uber has deeeep pockets, probably just drop fares further in a price war

But who wins in the long term. Yes reduced prices for now. What about later? No one wants to run at a loss forever?

 

[Ausbt]

Just reviewing my Amex statement, I booked a Brisbane hotel via Agoda's Virgin partnership website. Both the Agoda Invoice and my Amex statement list GST as zero. I'm wondering how that could be? An Australian, booking in Australia at an Australian Hotel and no GST? Someone call Gerry Harvey real quick!

 

[farstar]

I always find it really sad that people think that they need to pay no tax, GST is there for a reason the states are paid it. So should we cut money to hospitalsand schools because you don't want to pay GST. We will end up like Greece if people are dicks like that. Reallly pay your fair share of tax. If Uber think they can pay no tax they are a blot on the landscape.

 

[burmans]

So UberX is an illegal service in Australia
Yet the ATO wants to claim 10% GST

Seems to be legal then and the taxi industry can now shut up and go away

There is no relationship between being legal and being taxable. The Tax office has for a long time treated ALL income as generally taxable and indeed has published rules on this e.g.

CCH iKnow

To summarise

The tests as to whether an amount is assessable income under subsection 25(1) ITAA are the same for amounts received from legal and illegal activities. Where a taxpayer systematically engages in an illegal activity and the elements of a business are present such as repetition, regularity, view to a profit and organisation, the proceeds from the activity have an income character.

In fact this TR draws on English case law back as far as 1886.

 

[dajop]

Just reviewing my Amex statement, I booked a Brisbane hotel via Agoda's Virgin partnership website. Both the Agoda Invoice and my Amex statement list GST as zero. I'm wondering how that could be? An Australian, booking in Australia at an Australian Hotel and no GST? !

Funny you mention this. Last night I was looking at booking an Australian hotel from Agoda's Singapore website and the price jumped from the advertised $300 to $330 on final screen due to the addition of "local taxes". So contrary to what you are suggesting. Either someone's pocketing or someone's paying the GST.