No GST-free ride for Uber warns Australian Tax Office

Sedney : Thousands of Uber drivers across the nation will have to register for GST by August 1, which could mean the cost of rides taken by consumers on the popular ride-sharing service rises by 10 per cent.The Australian Taxation Office has confirmed that people who provide ride-sharing services such as Uber are providing “taxi travel” under GST law.
The decision may be viewed as slap in the face for fast-growing companies such as Uber, which has long argued that it’s a “ride-sharing” service and its drivers are not taxi drivers, and, therefore, do not need to have an ABN and pay GST.The move could mean that Uber’s cheaper option, uberX, becomes more expensive as the 10 per cent GST rate is applied on rides.For the first time, the Tax Office has issued guidance for taxpayers who provide “sharing economy” services like Uber and Airnbnb, warning that they may be up for GST, income tax and capital gains tax.
The ATO has said that people who occasionally rent out rooms or homes on Airbnb are not operating a bed and breakfast-style business, and, therefore, not required to register for GST. Individuals making money from renting out their rooms will still have to declare it as income on their tax return.
However, people driving Uber cars and similar ride-sharing services are being warned that they have until August 1 to register for GST –regardless of their turnover – or risk being caught under tax laws.
The penalties would be significant if the drivers failed to register by that date, the ATO said.The taxi industry has been lobbying to have Uber drivers sit within the same rules and regulations as taxi drivers. To date, more than 9000 uberX drivers operating across major states in Australia have been able to avoid GST payments by arguing they fall under the $75,000 turnover threshold at which GST applies.However, the ATO’s new guidance states: “If you drive passengers in a car for a fare, you may be providing ‘taxi travel’, and if you are, you need to register for GST.””Affected drivers must register for GST, charge GST on the full fare, lodge business activity statements and report the income in their tax returns,” Deputy Commissioner James O’Halloran said. “We’re of a view that ride sourcing is, in fact, providing taxi services and falls under the provisions of GST law.” The ATO has held discussions with the taxi industry and the rapidly growing sharing economy services such as Uber and Airbnb.