Uber drivers to charge GST from August
The Australian Tax Office (ATO) today announced that ridesharing service Uber is now classified as taxi travel, and as such, all drivers must register for and charge GST by August 1. To date, Uber's drivers have not been required to pay the tax, meaning fares could rise if the company chooses to pass the cost onto customers.
"Affected drivers must register for GST, charge GST on the full fare, lodge business activity statements and report the income in their tax returns," said ATO Deputy Commissioner James O'Halloran. "The existing tax law applies equally whether a buyer and seller come together at a bricks and mortar business or via a mobile phone app or web site."
Rather than working directly for Uber, UberX drivers are considered independent contractors. Drivers are required to use their own car, and to pay for their own insurance and fuel. The new ruling does however mean that they can claim GST credits on these expenses.
Independent contractors are typically exempt from paying GST if they earn under AUD$75,000, but must do so if they are providing taxi services.
Katie Curran, Uber Australia's communications lead, said the company will be challenging the new regulations, describing them as unfair.
"The ATO has wrongly chosen to categorise ridesharing as 'taxi travel', which the GST Act defines as 'transporting passengers, by taxi or limousine, for fares'," wrote Curran on Uber's official blog. "Ridesharing is not a taxi service. The vehicles involved in ridesharing are not taxis or limousines, and participants cannot accept street hails, cannot wait at ranks and do not use taxi meters."
Curran said the ATO's decision will impact over 9,000 UberX drivers, and could also discourage others from signing up to the service.
"Many driver partners are parents, retirees, or students looking for flexible work around their other commitments. Others use the platform for a finite period, such as saving for a wedding or house deposit. Many others have been unemployed and need a quick, safe and secure way to earn an income between jobs."
"The ATO’s decision raises barriers to entry that disproportionately affect those who would be otherwise unemployed or underemployed and make it unduly difficult for those people to earn an income when they need it most."
In Sydney, the UberX flag fall is currently AUD$2.50, while a taxi will charge AUD$3.60 or AUD$6.10 depending on the time. UberX bills AUD$1.45 per kilometre, compared to a minimum of AUD$2.19 in a taxi.
Uber does not currently collect GST in Australia.