back to article Australia forces UberX drivers to become tax collectors

Australia's Taxation Office has issued a guidance note titled “Providing taxi travel services through ride-sourcing and your tax obligations” that makes it clear Uber drivers need to register for, collect and pay the nation's goods and services tax (GST). The note coins the term “ride-sourcing” and defines it as “an ongoing …

  1. Anonymous Coward
    Big Brother

    Here comes the drill...

    So businesses with less than AU$75,000 turnover are spared the big hassle and cost of the GST, but the little ride-share guys who might do AU$5,000 a year will just have to get used to being bent over by the Aussie Govt.

    Good! How DARE the People attempt to get around the clammy hand of Bureaucracy in this way? Share THIS, you peons!

    1. Anonymous Coward
      Anonymous Coward

      Re: Here comes the drill...

      >>>> Good! How DARE the People attempt to get around the clammy hand of Bureaucracy in this way? Share THIS, you peons!

      Yes, how dare a government stand up to the big american corporations!?!? Let's insist we bend over, lube ourselves, and let the american corp ride roughshod over all our laws, all our homegrown businesses, and then insist on paying no tax.

      Extra shot in your starbucks latte? Or maybe you believe a company that sold you goods from a .co.uk website, sourced from a warehouse in Bedford, and delivered by a UK postie is really based in Luxembourg?

    2. julianh72

      Re: Here comes the drill...

      By the same logic, there should be no GST on a Domino's pizza, because each of the hole-in-the-wall outlets is a separately franchised "small business", and the guy who delivers it is an independent contractor (not an employee) who makes at the most a couple of hundred dollars a week.

      No, these are global multi-billion-dollar businesses, and they engineer their income structures to gain a competitive advantage by declaring all their income in low tax havens. They should be collecting and paying their taxes, insurances and licence fees in whatever countries they operate.

    3. Diogenes

      Re: Here comes the drill...

      Nope. Taxi drivers are one of the few groups that are not included in the 75k threshold.

      1. Mark 65

        Re: Here comes the drill...

        Thing is, you have to go around proving each person is an Uber driver in order to check they need to be registered and then work out what they've taken and it isn't like Uber will be giving you the details.

        Cost of enforcement >>>> cash obtained.

        1. dan1980

          Re: Here comes the drill...

          @Mark 65

          "Cost of enforcement >>>> cash obtained"

          Perhaps (quite possibly) but that's largely irrelevant because they are not saying, specifically, that Uber drivers must register for the GST but that Uber drivers are the same as taxi drivers and so must follow the same rules.

          So, it's not as though they are undertaking some new taxing regime that they must manage and enforce separately; they are explicitly including Uber drivers in the existing structure so whatever enforcement and back-end processes are used to deal with taxi drivers will be used for Uber drivers.

          When you say that Uber won't give them the details, I would ask why you feel that. I would think that they would be obliged to do so. They might not want too but the tax office has pretty wide reaching powers to compel organisations to hand over relevant details.

          1. mathew42
            Devil

            Re: Here comes the drill...

            > They might not want too but the tax office has pretty wide reaching powers to compel organisations to hand over relevant details.

            The ATO have previously worked with eBay to ensure that high volume sellers based in Australia are charging GST so there is an historical precedent. With a ruling like this I would put my house on the ATO to win.

            Trust me, I would hold greater hope of winning an argument with my illogical mother-in-law, than the ATO.

        2. DainB Bronze badge

          Re: Here comes the drill...

          Actually there's no cash transactions, so it will be as easy as ATO requesting information about all transactions from Uber, done and dusted.

          Now think how fast it takes to cross check drivers registered for GST as providing taxi services with database of taxi licenses and how easy for insurance companies will be to refuse any payments if driver does not have transport insurance and you understand that with this ATO ruling Uber was pretty much shot in the face with 120mm tank gun.

      2. Tac Eht Xilef

        Re: Here comes the drill...

        ^This^

        Division 144 of the GST act has always stated that taxi drivers are required to be GST registered regardless of turnover, or even whether they supply other goods or services (e.g. you can't run a low-turnover business selling cat pictures with a sideline in taxi services and claim exemption under the $75k limit), and several other determinations have clarified that the same applies specifically to services that are 'similar to and essentially in competition with the taxi industry'.

        i.e. Uber drivers are required to be GST registered & remit GST payments because they compete with taxis, but wedding limo drivers aren't because they don't.

        1. dan1980

          Re: Here comes the drill...

          @Tac Eht Xilef

          I am glad to see that here, at least, there is no "but we're ride sharing" grey-area for them to play around in; when it comes to GST, you must follow the exact same rules as taxi drivers.

          Enforcing is another matter, of course but it's now clear: you must register for GST, just like a taxi driver.

    4. dan1980

      Re: Here comes the drill...

      @Big John

      You didn't read the article throughly.

      "If you provide ride-sourcing services, you are providing ‘taxi travel’ services. This is because you make a car available for public hire and use it to transport passengers for a fare.

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

      Read it again.

      If you provide 'taxi travel' services then you must register for GST 'regardless of your turnover'. That's always been the case and it applies to all the current operators. Up until now, however, it has not applied to Uber because they claim they provide 'ride sharing' rather than 'taxi travel' services.

      This ruling is not really saying that Uber drivers, as a specific category, must register for GST; what it is saying is that Uber drivers fall under the existing category for 'taxi travel services'* and so must adhere to the same rules. That is, they must register for GST.

      I haven't down-voted you because I am giving you the benefit of the doubt that you simply didn't understand what was written in the article. To make it perfectly clear:

      1. Taxi drivers must register for the GST

      2. Uber 'ride share' drivers are to be considered as taxi drivers

      3. Uber drivers must register for GST

      This is what I am talking about when I say that Uber is undercutting the existing taxi drivers (some 80-90% of whom are sole license owners) by providing the same service while refusing to abide by the same regulations.

      Uber drivers are not being subjected to some kind of special, targeted 'Uber tax', designed to disadvantage them in favour of the current providers; they are simply being told they need to follow the same GST legislation that taxi drivers do.

      So, when you say:

      "How DARE the People attempt to get around the clammy hand of Bureaucracy in this way?"

      What it really means is:

      "How DARE Uber drivers and the massive, 40 billion-dollar, Google, Goldman Sachs, Baidu-backed company behind them attempt to avoid registering for the GST by making up a new word (ride-sharing) for 'taxi' and processing all payments offshore?"

      I agree - how dare they? Well, at least while still trying to paint themselves as some kind benevolent, 'yay sharing economy' saviour of people and opponent of the greedy government and corrupt taxi industry.

      * - This is because, as explained, they fall under the same definition - someone who "make[s] a car available for public hire and use[s] it to transport passengers for a fare". Just calling it 'ride sharing' or 'ride sourcing' doesn't change what the service is - or at least it shouldn't.

  2. dan1980

    First, is that the back of the Arthouse?

    Second. Good. (Not the venue - the ruling.)

    This is part of the reason why Uber is problematic: by not following the same regulations as 'normal' taxi services and drivers, they are able to undercut them because those regulations cost money to follow.

    Making them subject to at least some of the regulations that the established players have to follow (and pay for) means that the playing field is at least tipping in some measure back towards level. It still isn't because GST is just one thing that Uber is avoiding, but it's a step in the right direction.

    People who support Uber have a usual line about the evil, corrupt, money-grubbing taxi industry and how they hold us all to ransom and somehow force the governments to preference them, making Uber some kind of righteous saviour and champion of the people.

    The truth, however, is that whatever the taxi operators can be accused of, they have a higher cost of doing business because they follow the regulations imposed by the government.

    You don't have to learn some secret handshake to be a taxi operator in (e.g.) Sydney, you just need to follow the regulations and pay for the appropriate licenses and insurance and fork out whatever is required to adhere to the SLAs dictated by them. This includes radio operator and booking services, which is why taxis work with the large dispatchers - it's a requirement of the regulations they are following.

    All this costs money and the license alone is usually something that taxi drivers take out a mortgage for. These people - and most of them own just the one license - are not corrupt, powerful influencers of government policy; they are small business people trying to make a decent go of it.

    THESE are the people that Uber is really fighting - the ones with $200,000 mortgages on their taxi licenses, or the ones who can't even afford the license and drive shifts in someone else's taxi.

    People complain about rude drivers but the last time I had a rude taxi driver was in France.

    1. Simon Sharwood, Reg APAC Editor (Written by Reg staff)

      Nope. A pic from the Uber Cincinatti launch. Flickr CC collection FTW

      1. dan1980

        I suppose a big Uber event in Sydney might be goading the government a bit . . .

    2. mathew42
      WTF?

      Taxi plate owners are rent seekers

      > THESE are the people that Uber is really fighting - the ones with $200,000 mortgages on their taxi licenses, or the ones who can't even afford the license and drive shifts in someone else's taxi.

      I agree those people who have chosen to see a taxi plate license as an investment are at risk from Uber, but I have not seen a decent explanation as to why a plate should cost $500,000. That is simply rent seeking. It is also risky because the government can change the rules at any point in time (e.g. releasing new licences in Victoria) causing a significant drop in values.

      Those driving shifts in someone else's taxi which in my experience form the majority of drivers won't really be impacted by who the employer is. In fact they may find the overheads are cheaper with Uber.

      > People complain about rude drivers but the last time I had a rude taxi driver was in France.

      I agree I haven't encountered a rude taxi driver, but then I take care not to upset drivers. However if you asked about incompetent or unkempt, then plenty of drivers have given me good reason to wish that we already had driverless cars.

  3. Medixstiff

    This might make the states happy.

    Considering they've been finding it hard to catch Uber drivers, I wonder if they can get the names through the ATO, once people apply for their A.B.N. number.

    1. dan1980

      Re: This might make the states happy.

      One suspects they will and this is why this is such a hit for Uber.

      Uber drivers now MUST make themselves known to the government and register for GST and this will almost certainly have flow-on effects.

      Popcorn anyone?

  4. James 100

    Greedy government?

    Demanding that even the smallest taxi business register regardless of size seems a bit excessive to me: certainly most of the taxi outfits here in the UK don't do VAT, which is a fairly similar system generally AIUI. Uber in Europe is subject to VAT of course, being way over the threshold - giving small operators a little bit of an advantage on pricing.

    1. dan1980

      Re: Greedy government?

      @James 100

      Perhaps but at least this decision helps level the playing field; taxis must charge GST on their fares so Uber drivers should do so too.

  5. Anonymous Coward
    Anonymous Coward

    i don't know about Aus but....

    as the son of a British cab driver/firm operator as i understand the rules in the UK are as below. don;t know if the aus government has similar rules but if they do i see three options.

    In the UK taxi cab firm operators have to have a operator license, and a operator has to maintain a list of all there drivers and should maintain which jobs each driver does for legal reasons, if the Aus government has similar rules and declares Uber an operator they could request uber to

    a. get a license pay tax's as an operator and agree a method to pay the taxes for there users.(what this does to employment laws i can't say)

    b. aus government declare them as an unlicensed cab firm (making them illegal by default)

    c. uber to get a license and government requests a list of all drivers and the jobs they have sent to those drivers

    which leads to the following out comes

    a. uber pays taxes as an operator and for there drivers/users (best case all round as it moves it to more level playing field to for regular cab firms allows uber to operate and uber drivers pay there taxes via uber)

    b. Aus government makes uber illegal(as an unlicensed cab firm) has google, apple and microsoft pull it from there Aus app stores and massive legal issues/court cases ensue.(worst case all round)

    c.uber pays it's tax's but is legally forced to hang it's users out to dry. hundreds of uber users are sent tax bills by the government with relevant penalties etc.(best case Aus government as it'll make money on the penalties)

    from a personal point of view i hope the uk just bands uber as it's taking money form my families pocket. (or more realistically goes with route A)

    AC to hide from the uber supporters

    1. dan1980

      Re: i don't know about Aus but....

      Banning Uber?

      Taxi regulations differ by country and state (or city) but the simple truth is that Uber is providing the same service as is provided by regular, licensed taxis.

      Whatever differences there are are in the technicalities rather than in the effect, or in the perception of the customer.

      In London, Uber is said to be exempt from the (rather strict) taxi regulations because those apply to taxis with a 'taximeter' and the combination of smart phone and GPS that is used to calculate fares for Uber has, at least up until now, been deemed to not fall under the definition of a 'taximeter'.

      From a practical point of view, when you get into an Uber car, you pay a fare that is dynamically calculated - on the fly - based on distance/time and this is functionally identical to what a 'taxtmeter' does.

      Looked at in that way, 'problem' is that the term 'taximeter' needs to be redefined with reference to modern technology and the various ways that different devices - devices not conceived of when the original definition was put to paper - may provide the same function.

      In other words, the definition should focus on what the device does rather than specifically how it works.

      That's London and the story is different elsewhere but in almost all situations and locations, taxi services require special licenses and must adhere to certain regulations. Uber, through technicalities like calling themselves 'ride sharing' are skirting those regulations.

      Given that the governments of these states/cities/countries are the ones that have enforced the regulations in question, they owe it to the existing operators (who are playing by the rules) to make definitive rulings here that ensure that the playing field is level.

      This move of forcing Uber drivers to charge GST is a step in that direction.

  6. Inflex

    GST/BAS isn't that hard

    I hear a lot of people wailing about how hard GST is to sort out for the quarterly BAS. Here's an insight, if you already have your business accounting sorted out properly, and you don't let your income & expense paperwork pile up then it's typically a 5 second wait from your [BAS summary] click to getting your answer, especially for smaller businesses with simpler work-flows. Even manually it's fall-off-log-simple GST_from_income -GST_on_expenses = GST_owed_to_ATO (simple form, fractionally harder if you do export sales or have a capital expenditure).

    It's not the BAS/GST's fault if you haven't kept your paperwork up to date; you'll have to do it regardless come EOFY.

    (It's like people whining that they end up worse off in the pocket due to 'extra tax' when they move in to the next tax bracket; you don't, the new tax bracket only reflects on income *above* that threshold)

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