back to article Uber Australia is broke: 'We don't pay tax because we don't generate revenue'

The Netherlands is the natural place for Uber to bill its Australian customers, Airbnb only lives in Ireland because it's got the best skills pool, and Bermuda is beloved of Chevron merely because it has a good maritime safety record. Those were some of the more amusing outcomes of yesterday's Australian Senate hearing into …

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It beggars belief...

"That we, as a start up, shouldn't pay an existing tax, GST"

At least they're upfront about their intent to evade taxes.

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Re: It beggars belief...

when was the law against murdering spokesmen enacted?

Presumably it doesn't apply today

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public policy director Brad Kitschke

I like the way his name combines the essential words "kitsch" and "Tchotchke". Continuing down the Yiddish phrasebook let's add "chutzpah" and "schmuck" but definitely not "mensch".

But (playing the ball, not the man) his argument is gorgeous - that a VAT/GST (generally one of the few parts of a tax code that is simple enough to encompass unknown future activities since at core it's "money changed hands for something not on-sold? give us a cut!") needs revision to suit his company's trading model, when that model was created with the tax code already established. He's one of the underpants gnomes and now it's the state's duty to fill in step 2

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Re: It beggars belief...

when was the law against murdering spokesmen enacted?

Presumably it doesn't apply today

As long as you were born after it entered the statute, I'd say you're in the clear.

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Re: It beggars belief...

In Australia, GST is only paid by businesses that turn over about $70,000 or more. That is the law.

Most Uber drivers receive far less than that. So Uber is saying that they should not pay GST. Not unreasonable given the law.

Company tax does not really exist for domestic companies in Australia, contrary to what is often said. That is because every dollar collected in company tax becomes a "franking credit" that is available when dividends are paid to shareholders. Zero net tax. (A Paul Keating reform.) The international situation is obviously messy in both ways.

So things are not as simple as they may seem.

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Re: It beggars belief...

@aberglas

You say:

"GST is only paid by businesses that turn over about $70,000 or more."

First, it's $75K but that's just a technicality and doesn't really change anything. When you say 'turn over', however, that needs to be clarified because it's the 'GST turnover' that matters. The difference is that 'GST turnonver' is the turnover only from sales on which the GST is applicable. So, for example, a grocer who provides only fresh fruit and vegetables - to which GST is not applied - would have effectively $0 'GST turnover' regardless of actual turnover.

I the tax doesn't have to be paid by consumers then it doesn't have to be paid by the supplier. And that is because suppliers do not pay the tax so much as collect it from customers on behalf of the Government: it is a consumption tax.

So, with that understanding, the question with Uber drivers is simply one of whether the government requires them to collect tax from their customers on behalf of the ATO.

As above, if you supply more than $75K worth of GST-taxable goods and/or services, then you have to register for the GST and start collecting and remitting GST on your sales.

There is, however, a particularly pertinent exception to that rule, which is that:

"Under the GST law, if you carry on an enterprise and provide taxi travel services in that enterprise, you are required to be registered for GST regardless of your turnover."

There are two criteria there: "carry[ing] on an enterprise" and "provid[ing] taxi travel services".

So, the question is whether Uber drivers meet both these criteria. If so, they must register for GST and collect GST on fares "regardless of [their] turnover".

The first criterion hinges on what is considered an "enterprise"*. The exact definition is somewhat vague but one important point is that it is not equivalent to a "business". In the ATO's own words:

"Enterprise is defined widely because the GST is intended to have a broad base."

Thus, a the definition for what is an "enterprise" for GST purposes is (intentionally) broader than what may be considered a "business" under the Corporations Act and so includes activities done "in the form of a business".

What that boils down to is that if you engage in an activity that is intended to generate profit and is in any way on-going and you are not an employee, then you are "engaging in an enterprise". The last part is important because obviously, a wage-slave is not an "enterprise" and so the insistence of Uber that their drivers are not employees is of particular relevance; their decision to run that way results in the drivers satisfying the "enterprise" crtierion.

The second criterion is whether Uber drivers "provide taxi travel services" and the answer is, simply: yes. The only question there can be is whether a vehicle used for an Uber service is a "taxi" or not. The ATO have recently made this abundantly clear:

"For GST purposes, the word taxi takes on its broad ordinary meaning of a car (vehicle) made available for public hire that is used to transport passengers for fares."

There is no room in the English langauge to exclude Uber drivers from falling under that definition, save if they operated via bicycle (relevant as rickshaws are not covered). But, to be even clearer, they have provided a parallel definiton of 'ride-sourcing' - the semantic argument used by Uber to try and get around this:

"Ride-sourcing is an ongoing arrangement where:
  • you (a driver) make a car available for public hire
  • a passenger uses, for example, a website or smart phone app provided by a third party (facilitator) to request a ride
  • you use the car to transport the passenger for payment (a fare) with a view to profit."

That's all very long-winded but I wanted to be thorough as many people seem not to understand this and thus argue along the lines that Uber is being targetted and drivers taxed, which is not really the case.

So, we then come to a question that may have occured to some people: why must taxi drivers collect GST regardless of turnover? The ATO have answered this question directly and the summary is: to avoid problems that would arise from inconsistency, where one taxi ride is subject to GST and another is not.

That reasoning can easily be applied to Uber, specifically the following explanation for the exclusion (for all taxi drivers):

"Meter rates are set by each state authority and after after 1 July 2000 all meters were adjusted to reflect the GST. If some drivers were registered and others were not, all would be collecting the higher rate. This would disadvantage drivers who had to be registered if the ordinary registration turnover threshold applied."

In other words, taxi fares have GST built in and this is set by the states, rather than the taxi dispatch operators or individual drivers. Thus they are collecting GST from passengers regardless of their GST-eligible turnover and so if a driver earning less than $75K didn't have to register and remit GST, that driver would earn 10% more on every fare than a driver who was over the threshold.

It's about providing a level playing field for all 'enterprises' operating taxi services and that is how and why the original law was written that way long before Uber existed.

* - An "enterprise" is tautologically defined as any entity carrying on an enterprise so the terms can be considered synonymous for this purpose.

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Re: It beggars belief...

As a side note on why the law requires all taxi drivers to register regardless of turnover, I suspect that a major reason is that the Government actually wanted to be able to collect that money.

First, it was decided that taxi services should be subject to the GST, in keeping with the goal for it to be a broad tax replacing many other sales and services taxes.

That decision being made, the tax actually needed to be collected for there to be any point and I am sure that that it was well understood that the vast majority of drivers would fall under the threshold, meaning they wouldn't have to register, would have to collect and thus there would be next-to no tax revenue from an entire sector, simply based on the way it is organised.

Unlike most other industries, there aren't really any large players* - the market is almost 100% serviced by individual owner-drivers. It's not like, say, running a small corner store that turns-over $50K. In that market, the vast majority of supply is conducted by businesses that exceed the threshold and thus must collect GST. Excluding the small operators does very little to impact tax revenue - in direct contrast with the taxi industry which is almost entirely small operators under the threshold.

Of course, that's just my own interpretation but it's a logical step and we can take it one further by looking at Uber.

What happens to the GST revenue if Uber reduces the use of taxis in favour of 'ride sharing' services? Easy: it goes down. If you have a hundred trips and 50 of them are made using a service that doesn't have to register and remit GST then you have just lost 50% or the GST revenue from the supply of that service.

* - Something glossed-over or misunderstood by Uber supporters, as they misconstrue or misrepresent the big dispatch operators as the target of the 'disruption'.

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Joke

Re: It beggars belief...

Your message is wrong. Anyone who sells something, whether it is an object or a service, must pay GST on the transaction.

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Re: It beggars belief...

Your message is wrong. Any Company or individual who sells a product whether it be an object or a service must pay GST on the transaction. Certaily an Uber driver will not pay Conpany tax but must pay GST on every transaction.

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Re: It beggars belief...

Excellent summary, *except* for the quote from the ATO: "to avoid problems that would arise from inconsistency, where one taxi ride is subject to GST and another is not". This is circular reasoning: what they are saying is that "we screwed up setting meter rates, so we changed the regulations to match". In any other enterprise (say, the plumbing trade), this nonsense doesn't apply.

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Re: It beggars belief...

Interesting - but is a driver who, for instance, accepts a fare each way on their regular commute acting as an enterprise?

I'm not entirely convinced that they are - it's just a dynamic, and large, car pooling service.

Obviously if you are just driving around all day grabbing fares then you are operating as an enterprise...

How far out of your way do you have to go to become a taxi rather than a car share?

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Re: It beggars belief...

@Fludge

"Your message is wrong. Anyone who sells something, whether it is an object or a service, must pay GST on the transaction."

No. That is just factually incorrect.

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Very few taxi drivers are owners

> Unlike most other industries, there aren't really any large players* - the market is almost 100% serviced by individual owner-drivers.

Sadly most taxi license plates are not owned by the driver, because they cost between $350,000 - $500,000 although the value has been declining since the entry of Uber. A taxi driver working for the owner typically receives 50% of the fare and the owner receives the other 50%.

There is zero reason that the right to operate a taxi should cost more than the fees required to regulate the industry and provide training. The cost of the taxi license plates drives up the cost of fares because the owner wants to make a reasonable return on their investment.

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Re: It beggars belief...

@John Robson

"Interesting - but is a driver who, for instance, accepts a fare each way on their regular commute acting as an enterprise?"

Indeed. Or, at least I find it interesting.

The exact rules are not clear cut and if you look at the history of private rulings published by the tax Commissioner, you will see some that address the question of whether an entity can be said to be "carrying on an enterprise" or not.

Of interest (at least to me) is that some of those cases are where an entity is trying to avoid paying GST because they believe that the supply was not made while engaged in an enterprise while others are around entities attempting to claim credits by saying that the GST costs were incurred as part of carrying on an enterprise. So it goes both ways.

To the specific case of 'car pooling', the ATO does make some specific mention of these systems, with reference to 'chipping in for petrol'.

Here, I think you raise a key point when you say "on their regular commute acting as an enterprise". The most important thing is that the service is whether the service is provided in furtherance of an enterprise in exchange for 'consideration'. It should be noted that it need not be the primary enterprise*.

If the goal is to help cover your commuting cost then my instinct would be that such an arrangement would not qualify, so long as the trip would have been made regardless of any paying passenger.

An Uber driver is not going to be making that trip otherwise because they are available for public hire, to go wherever the customer wishes. They may be able to pick-and-choose but that isn't, in my view, sufficient differentiation as a taxi driver may also choose not to go to a job boradcast over the radio.

In the end, though, with Uber I don't think it matters because Uber set the price of the fares, not the driver. Because of that they can't really raise the price by 10% but only when your driver qualifies for registering for the GST.

* - see: https://www.ato.gov.au/rba/content/?ffi=/misc/rba/content/1012201810746.htm

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Re: Very few taxi drivers are owners

@matthew42

Sorry - I meant owner-operators. I used both 'operators' and 'drivers' several times through my posts and got them mixed up that time.

That said, many of those owners share the driving duties with someone else but, even so, the truth is that some 90% of taxi licenses - in Sydney at least - are owned by someone who only owns that one single license.

"There is zero reason that the right to operate a taxi should cost more than the fees required to regulate the industry and provide training. The cost of the taxi license plates drives up the cost of fares because the owner wants to make a reasonable return on their investment."

No and almost. In that order.

No to "there is zero reason" because there is every reason. Why? Licenses are limited and so when you talk about how much a taxi license "costs", that is the cost not to buy a new license from the Government (though they do release new licenses occasionally) but the cost to buy one at auction from an existing owner. The price you see is commonly referred to as the 'transfer cost' or 'transfer value' and it has more in common with buying a home than it does with buying (say) a new car.

Now, if you say that licenses shouldn't be limited to X number then that is something rather different but as it stands, with he regulations as they are, the "reason" taxi licenses are expensive is simple: supply and demand.

To the second sentence, you are correct in saying that the desire for investment return is an issue but it's not entirely accurate that it drives up fares because the state governments set the fares, not the owners.

Of course, that price has to be responsive to the industry so there is an indirect influence but I am not sure I would go so far as to say that it drives prices up. It would be more correct to say that this drives bailee drivers' income down and that it drives owner-drivers' income down as they spend more of their income servicing the loan the took to purchase the license.

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Re: It beggars belief...

"If the goal is to help cover your commuting cost then my instinct would be that such an arrangement would not qualify, so long as the trip would have been made regardless of any paying passenger."

That was the case I was putting forward. But I can't quite work out how you would decide where that case stops...

Presumably where your petrol & wear costs are more than covered?

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Re: It beggars belief...

@John

It's not necessarily clear cut and that is why the Commissioner needs to makes rulings on just these types of questions.

Whatever the case, however, being an Uber driver shouldn't qualify for whatever exceptions might be allowed for car-pooling and truly ad-hoc situations.

Again it is just my instinct, but I would suggest that the very act of signing up as an Uber driver and what that involves* would count as strong evidence that your accepting payment for accepting public hire requests is entirely within the course of your activities as an enterprise and aimed at making profit by engaging in those activities.

* - Here, again, Uber are the best source of information about how they should be judged because they stress how rigorous the process is to be accepted as an Uber driver. Some have refuted those claims but Uber themselves suggest that it takes time and effort to become an Uber driver and, to me, would count against the assertion that Uber drivers are not engaging in an enterprise.

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Re: It beggars belief...

"is a driver who, for instance, accepts a fare each way on their regular commute acting as an enterprise?"

As I understand from the very broad definition, If you're getting paid, it's an enterprise. If you're not getting paid, it's a car share.

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Re: It beggars belief...

"As I understand from the very broad definition, If you're getting paid, it's an enterprise. If you're not getting paid, it's a car share."

I don't think it unreasonable to expect some remuneration towards petrol & wear and tear (as defined by your government's own tax office).

Car sharing without is fine if you drive half the time, and I drive the other half, but if you always do the driving then I'm not contributing appropriately to the arrangement - paying 50% of the relevant milage rate seems fair to me - and probably good for you as well.

Carry two people to work (which I could easily have done at a previous job and you can either cut the costs in 3, or maybe everyone you carry is happy to put in 50% - in which case your own commute is free.

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Re: It beggars belief... @dan1980

Adding to the very helpful comment you made, whilst you've discussed in detail the liability of drivers to GST, you haven't really touched on the liability of Uber as a ride intermediary.

I suspect that Uber are trying to argue that they are an intermediary/broker and hence they are merely acting as a 'dating agency' hence are not in the ride business at all!

I also suspect they are wanting to use a tax avoidance trick used by UK supermarkets, where your receipt may show a "payment processing fee".

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Re: Very few taxi drivers are owners

<quote>Sadly most taxi license plates are not owned by the driver, because they cost between $350,000 - $500,000 although the value has been declining since the entry of Uber. A taxi driver working for the owner typically receives 50% of the fare and the owner receives the other 50%.</quote>

Sadly, in many areas of the USofA, that (the section in italics) is not true. In my local area, those drivers actually lease the cab from the owner; and must fork out the daily lease payment before they make ANY money. A slow day may end up actually costing the driver money when you take into consideration the lease payment and gas.

Since the cab owner gets a fixed revenue from the daily leases, they have no incentive to use fuel efficient vehicles, and often purchase retired (gas guzzling) police vehicles at auction.

Then again, there are exceptions, like the one owner-operator who bought a used Toyota Prius and put it out on the street as a cab. He most certainly likes the 40+ MPG he gets out of it, when they typical Crown Vic ex-cop car struggles to get 10 MPG. But, then again he is an exception to the typical cab operator.

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Re: It beggars belief...

No, it's correct.

Above $75000 you pay the GST on all your outputs. End of story.

Below $75000 you pay the GST on ALL your inputs ... with no opportunity to claim GST credits and backbill them.

For mine ... the average Uber driver would be better off registered (in a credits sense) - especially when starting out - as he could claim back GST credits on the car, repairs to same, fuel, maintenance and other running costs - reducing his expenses by 10%. As his customers would be responsible for paying the GST, he'd be better off (aside from the need to collect and remit the tax to the ATO).

All the above said, that would introduce a level of accounting complexity that the average driver may not be interested in ... but surely Uber could build this in to their service to the driver.

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Anonymous Coward

Re: It beggars belief...

Notice how the large multinational Taxi companies also avoid paying taxes?

No, me neither.

And this is just stupid. Surely Uber gets a cut from every ride? And those, you'd think, would add up to an amount over the threshold?

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Re: It beggars belief...

So Über drivers don't pay GST on the money they receive from Über. I'm fine with that. [edit after reading comments below, I'm not fine with that because there is a $0 registration threshold on taxi drivers] However Über themselves should pay GST on the money they receive, you can argue whether that is the full amount of the fare or their 25% commission, but they should be paying something.

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Re: It beggars belief...

I'm guessing Australia hasn't introduced MOSS returns yet so the place of supply is Holland. The only country outside the EU I'm aware of that has introduced an equivalent to MOSS is Japan.

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Re: Very few taxi drivers are owners

the owner wants to make a reasonable return on their investment."

Whatever the outcome, Uber is certainly shaking up the industry though. That may mean that some people will learn the hard way that "the value of your investment may go down as well as up" and that putting money into something and expecting to sit back and take 50% of the profits might not be a long term sustainable model. If the licence plates decline in value enough, maybe taxiing can go back to the intended owner/driver model.

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Re: It beggars belief...

@Frank Oz

"No, it's correct."

If you are referring to my response to @Fludge's comments then perhaps I misunderstood him. He said:

"Your message is wrong. Anyone who sells something, whether it is an object or a service, must pay GST on the transaction."

I took that to mean that they must pay GST on the sale/supply. I.e. if I am a shop owner and sell carrot to someone, I must pay GST to the government. And that is not true at all. Sure, I may have to pay GST in the form of higher prices when I pay rent or but cash registers or hire someone to paint the shop, but that's not how I interpreted the comment.

On that note, however, you say:

"For mine ... the average Uber driver would be better off registered (in a credits sense) - especially when starting out - as he could claim back GST credits on the car, repairs to same, fuel, maintenance and other running costs - reducing his expenses by 10%. As his customers would be responsible for paying the GST, he'd be better off (aside from the need to collect and remit the tax to the ATO)."

And you have an perfectly valid point there and the ATO agrees! There are two main reasons listed for why the definition of "carrying on an enterprise" is so broad. The first, as already mentioned, is that the GST is designed to be a broad tax. The second, however, is in line with your suggestion, as follows:

"Activities done by particular entities are included in the definition of enterprise so that those entities can become registered for ABN and GST purposes and to potentially allow them to obtain input tax credits"

Additionally, and even more closely matching what you say, in their advice for when you must register for GST, the ATO says that you need to register if you wish to "claim fuel tax credits for your business or enterprise."

As I said in another post, the broad definition of 'enterprise' can cut both ways - in some instances allowing an entity to claim credits but in another instance, requiring them to collect and remit GST. In most cases, it's both as the requirements come bundled with the allowances.

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Re: Very few taxi drivers are owners

It's a safety feature apparently - only very safe drivers with the money to operate a perfectly maintained vehicle could afford the $1M taxi medallion - which is why New York taxis are so nice

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Re: It beggars belief...

I love your typical Australian Office of Legal Drafting (OLD) "definition" of Enterprise.

The OLD "definition" for Enterprise can best be thought of using the probable OLD "definition" of CAT - a cat is an animal that looks like a cat, moves like a cat, feeds like a cat and makes noises like a cat. A totally meaningless definition unless first you know what a cat is.

Quite simply Uber are claiming that they do not understand what a "cat" is on the grounds that the "definition" is whatever you decide to "think" it to be at any point in time.

Note that Definition is in quotes above because the OLD says that the Macquarie dictionary definition of definition is not the same as the rest of the worlds definition of definition which is why in the rest of the world Part 1 of the Civil Aviation Regulations/Rules is Definitions but in Australia it was Interpretations until the minister intervened - and even then OLD refused to use Definitions and settled for Dictionary - even though they were instructed by parliament to harmonize with the US FARs where part 1 is Definitions. This clearly indicates why the Australian aviation legislation is so totally out of step with the American and European legislation.

In the rest of the world "harmonized" regulations leads to the USA, Europe and almost every country except Australia using exactly the same single definition of Aerodrome/Airport. Last time I looked Australia had six definitions for Aerodrome and not one of those harmonized with, or were as clear as, the rest of the worlds standard.

Then again, in their opinion, the OLD's crowning glory was the 144 page (English language only - not multilingual) document detailing how to fill in the two page GST statement form.

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It would be helpful if the article stated WHICH COUNTRY it was refering to....

It wasn't until half way down that I understood it might be about Australia and not the Netherlands.

You know, a number of countries have senates, not just Australia.

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Re: It would be helpful if the article stated WHICH COUNTRY it was refering to....

I got to the second from last paragraph when I realised it wasn't America they were talking about.

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"It would be helpful if the article stated WHICH COUNTRY it was refering to...."

Given Australia is the second word of the title, that might be a clue.

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I thought it was the US senate, referring to an example of Uber tax dodging in Australia.

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Reading comprehension

The other nine occurrences in the story might also be considered a clue.

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The testimony could have been given in any Senate

.... not just Australia. Just because Uber Australia is broke doesn't mean that this was testimony in the Australian Senate. It could have been the US, the EU, the Netherlands, who knows. Plenty of politicians all over have been investigating Uber.

I personally thought it was in the US since this has come up more than once, specifically discussions during US Senate hearings about Starbucks evading taxes in the UK. The article never made it clear which Senate this was.

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The companies are just doing what they are legally allowed to do. If you want to stop them then stop them. As users don't use them and as government change the rules to stop the tax avoidance. But will they I bet not some lobbyist will visit anyone pushing to make a change and things will carry on as they are. Australia has been barking at this for years and done nothing so one can only take it that they bark each time the personal coffer gets low and needs a top up.

If this was really about the Australia public interest then the laws would have changed by now or at least a draft in for reading.

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I think that's part of the question. Are they playing by the rules? Being hauled before a legislative body to discuss why you think your current behavior is okay is usually done for two reasons: You've done something wrong and they want to grandstand a bit, or you've violated the spirit of a rule but technically, you are right.

The former is generally done to score political points with the constituents back home, but the latter is typically a shot across the bow to either stop violating the spirit of the rules, or be prepared to face the consequences. My guess is that like their American counterparts, these senators are giving Uber, Airbnb, Chevron, etc., a warning that the should become good corporate citizens without legislative action, or the legislative action won't be nearly as friendly.

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Upvotes for both of you.

I think the first, important step on this path was the ATO clarifying that 'ride sharing' services were, for the purposes of GST, are 'taxi services' and thus the drivers, unless they are employees - which Uber vehemently argues they are not - are required to register and collect GST.

Importantly, that's not actually a change of the law, it's simply a clarification about the common language of the existing law.

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" these senators are giving Uber, Airbnb, Chevron, etc., a warning that the should become good corporate citizens without legislative action, or the legislative action won't be nearly as friendly."

Given that Uber has given up on UberPop in the Netherlands after 40-ish arrests of individual drivers, two raids by an interesting collection of government agencies, and racking up something like €750.000 in fines ( in a country where corporate fines are so low they're considered operational hazards, no less..) , maybe "shooting across the bow" should be done a bit more...convincingly?

Because, y'know, the service they provide has been deemed illegal in the country they've decided to be registrated in... Maybe some translation of Dutch court proceedings and news articles into english would benefit the Pollitickians there inOz..

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Fuck off Uber.

I don't care how "innovative" you claim to be. Play by the law of the land, or get the fuck out.

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Re: Fuck off Uber.

The law says that taxi owners (not drivers) are allowed to impose a private tax on all rides, plus restrict the availability of cabs at key times.

Bullshit law.

Go Uber!

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Re: Fuck off Uber.

So, you are all for foreign companies coming into $YourCountry, setting up shop, and paying absolutely no tax on their operation?

Don't get me wrong, I'm all for Uber shaking up incumbents, as long as they are playing on a level field.

The minute they start doing dodgy taxation practices, or claiming tax shouldn't apply to them because they're a startup, or that their drivers aren't required to undergo the same safety and background checks as normal taxis, or carry the same level of liability insurance, is when I tell them to get fucked.

The laws were here for them to comply with, before they even got into this country. For them to flagrantly ignore it, and claim special treatment for something they do not deserve, is the precise moment I tell them to fuck off.

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Not a taxi company

The argument, they they are not a taxi company, they are a technology company is complete tosh. They are a taxi dispatcher that happens to use computers to dispatch the cars.

I guess Amazon isn't a retailer, because, you know, they use computers to sell things... But there again, so do most shops these days, as do many taxi companies.

Here in Germany, they are acting illegally, or at least encouraging their drivers to do so. In Germany you need insurance to drive a car. If you are using it commercially (private hire), you need a professional driving licence, if you don't have that, you can't get insurance for driving commercially - just your private insurance, which covers driving to your permanent place of work, plus private driving.

But most Uber drivers don't have the relevant driving licence (which is very different to a taxi medallion in the USA, this is purely the type of driving licence), which means they are driving on private insureance, which in turn means:

1) if they have an accident, the insurance won't pay, so they will be personally liable for all damages

2) if they have an accident, they will be prosecuted for driving without insurance

3) if they are stopped by the police, they will receive a fine and possibly lose their licence

But Uber claims this isn't their problem, because they are a startup and they are shaking up the industry!

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Re: Not a taxi company

@big_D

While I agree with your post, you're actually chasing after their red-herring.

It doesn't matter at all whether Uber is a 'taxi company' or a 'technology company', nor whether they dispatch taxis or or not, nor whether they use computers and 'apps' or radios and meters.

That's because it's not really about Uber Australia the company or Uber in the Netherlands or how they are shunting funds back and forward. In some respects they could operate entirely from overseas as there is no need to provide any services to drivers or customers locally.

What it's really about is the Uber drivers.

THEY are the ones actually providing the service to the consumer and, as that service is taxable under the GST, they are the ones who are required - by law - to collect that 10% and then remit it to the ATO.

That is the heart of the issue here and most everything else it just distraction. The reason is that GST is a consumption tax borne by the consumer and so is levied on the cost of the sale to the consumer. It has nothing to do with the revenue or anything else: if a taxable sale is made for $55 then $5 of that is GST that is paid by the consumer for the sole purpose of it going to the Government. That $5 is not there for the Uber driver to keep.

So what Uber as a company actually is and whatever semantic somersaults they pull are absolutely irrelevant to GST. GST is a tax on the consumer at the point of purchase so all that matters is the service that the consumer is paying to be supplied with.

Uber passengers are paying for a service offered and used and consumed in Australia and that service is provided by an entity (the driver) in Australia who is engaged in activities done "in the form of a business".

The back-end technicalities of what is involved, end-to-end, in providing that service has no bearing on that because the service being paid for by the consumer - the passenger - is to be driven from one location to another location by someone in a vehicle provided for public hire for a fee and.

Why does Uber care if their drivers have to register for the GST?

First, it identifies them and so makes it far easier to deal with driver if it is ruled that they are breaking state taxi regulations. Second, and this is perhaps the bigger one, it means that Uber will have to pay their drivers more, which means either taking a smaller cut for themselves or raising the fares, which will remove some of their competitive edge.

In essence, Uber drivers (in Australia) have been supplementing their earnings by pocketing the GST that should, by law, be remitted to the government. Thus they are able to accept a lower base payment. Remitting that GST collected to the ATO means that they must re-evaluate their earnings and may find that driver an Uber car is no longer feasible unless prices are raised.

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Silver badge

Re: Fuck off Uber.

> Play by the law of the land, or get the fuck out.

The whole point of this (Australian) Senate hearing is to debate whether or not they are "playing by the law of the land". Until there's been a decision in court, they're innocent, no matter how much grandstanding politicos (or tabloid rants) say otherwise.

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Re: Fuck off Uber.

> So, you are all for foreign companies coming into $YourCountry, setting up shop, and paying absolutely no tax on their operation?

If that's the law, and you don't like it, change the law. Blaming companies for doing what the law allows is both futile and foolish.

Tax is theft, or at least "demanding money with menaces", but the law says the government - and nobody else - is allowed to do that. ("Demanding money with menaces" is a specific UK crime, I expect other countries have something similar.)

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Re: Not a taxi company

> But Uber claims this isn't their problem,

Of course it isn't their problem, given their business model. You've stated three very clear reasons, all of which are the driver's problem.

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Re: Not a taxi company

@nijam but Uber are using these drivers, without checking the drivers are legally allowed to transport passengers. That is their problem, because they are putting their reputation and the lives and welfare of their customers at risk.

If you are injured in a crash and the Uber driver is not insured, he files bankruptcy and you can pay for your own medical expenses and compensate yourself for loss of income... It isn't Uber's problem, according to you.

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Re: "Blaming companies for doing what the law allows is both futile and foolish."

Quite right, tax laws do need tightening up to eliminate this sort of behaviour, but it's going to require tremendous international cooperation to do it properly. It's not within the power of an individual government to fix, more's the pity.

"Tax is theft"

No, it isn't.

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