It’s been one month since the deadline imposed by the Australian Taxation Office (“ATO”) for Uber and other ride-sourcing drivers to register for GST. The move on 1 August 2015 has received a significant amount of press. Uber has since increased its prices by approximately 10% on its UberX service and sought to challenge the ATO’s position in the Federal Court.

For most businesses, registration for GST is only required once the turnover for the business exceeds $75,000. However, the GST legislation specifically requires people who drive a taxi, chauffeur driven limo or hire car to collect GST regardless of their turnover.

The main reason for the mandatory registration is to ensure equality across all drivers. Meter rates for taxi services are centrally set. If some drivers were not required to register for GST, they would make an additional 10% on the same fare provided by a registered driver.

Although Uber drivers do not hold taxi licences, the ATO has determined that they qualify as a ‘taxi’ for GST purposes. The ATO defines a taxi as ‘a car (vehicle) made available for public hire that is used to transport passengers for fares’.

The ATO ruling does not apply to:

  • Non-commercial car-pooling arrangements where passengers contribute ‘petrol money’ (or other arrangements where there is no view to profit);
  • Car sharing arrangements where multiple users have access to a car which they use to drive themselves from one location to another;
  • Arrangements that use vehicles other than cars, for example motorised tricycles; or
  • Arrangements where a car is used only to transport passengers for a particular purpose (for example, a wedding or a funeral procession) and which is not made available more generally to transport members of the public from one place to another.

Therefore, if you make your car available for public hire with a view to profit you are required to register for GST (regardless of your turnover). Given the ATO’s recent access to credit card merchant data, we expect to see more ATO audit activity focused on drivers involved in ride-sharing services.

Next Steps

If you would like to know more about how this could impact you, please contact our tax team: Murray Howlett, Josh Meggs and Kylee Smith on (07) 3023 1300.