ATO Advice On “Sharing Economy” Says Uber Drivers Must Register For GST
Thursday 21 May 2015 @ 11.01 a.m. | Taxation
The Australian Tax Office has released advice on “the sharing economy”, which states that people providing ride-sourcing services with third-party facilitators like Uber are providing “taxi travel” and are required to register for GST regardless of their turnover. Drivers will have until 1 August 2015 to get an ABN and register for GST.
Deputy Commissioner James O’Halloran said in a media release:
“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…We understand that people often don’t consider the tax consequences of new and emerging business models. Our first step is to assist taxpayers involved in the sharing economy to meet their tax obligations.”
The Sydney Morning Herald reported the ATO said there would be significant penalties if the drivers failed to register by 1 August 2015.
The ATO’s advice also covers renting and letting out parking spaces through services such as the Parkhound app and providing odd jobs or errands through services like Airtasker.
Uber Threatens Legal Action
Uber reacted angrily to the news, saying it had been “singled out” and that it was disappointed that the ATO had “taken it upon itself to dictate government policy for the sharing economy by imposing a flawed interpretation of a law that was introduced in the 1990s upon participants of a new business model that is only one year old”. General Manager David Rohrsheim told The Guardian:
“Today’s decision by the ATO is not a tax on Uber but rather, impacts the over 9,000 ordinary Australians who drive on the uberX platform… These are 9,000 individuals who will now be caught up in red tape before they even accept their first ride, and will then be hit with a tax on their very first dollar earned, unlike truck drivers, painters, online sellers, gardeners, other sharing economy participants, and every other small business who do not have to collect GST until their business reaches $75,000 per annum in turnover.”
He also said the company had not yet decided whether to increase prices or reimburse drivers if legal action fails.
However, the Taxi Council of NSW pointed out that all its members have to register for GST regardless of whether they meet the threshold, with council chief executive Roy Wakelin-King telling ABC News that “it continues to amaze me that Uber believe that they’re above the law”. Likewise, the Australian Taxi Industry Association welcomed the changes, but warned Uber is still able to cut corners, as drivers may be underinsured and without safety checks. CEO Blair Davies told the Sydney Morning Herald that “Apart from paying tax in Australia, Uber needs to commit to respecting state regulations that protect the safety of passengers and drivers”.
This is not the first time Uber has clashed with policy makers. The company is well known for its disruptive approach to entering new markets, with various Uber services being recently banned or legally challenged in Germany, Spain, Belgium and India, among others.
Airbnb Stays GST Free
The ATO advised that renting out rooms in your house, popularised by services like Airbnb, in an “input taxed supply of residential rent”, that is not subject to GST. However, they warned that hosts still need to declare income earned from the services in their annual tax return and may be subject to capital gains consequences if they later sell the property. Airbnb’s Australian general manager, Sam McDonagh, told ABC News they welcomed the announcement, which they saw as “another signal that the sharing economy is here to stay in Australia”.
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