The Australian Taxation Office has today announced a tax crackdown on the 'sharing economy,' singling out UberX drivers to start paying GST. But thanks to a loophole that sees UberX defined as a taxi service for GST purposes, drivers will now need to collect tax for every dollar earned.
The ATO today announced the changes will affect "collaborative consumption activities including taxi travel through ride-sourcing...the provision of accommodation supplies, parking services and making offers to provide goods or services to a consumer."
According to a statement from ATO Deputy Commissioner James O'Halloran, the new measures apply regardless of whether business is conducted in a store or through an app or website.
While there has been confusion in the past at the State level as to how UberX is classified under the Transport Act, the ATO has confirmed that ridesharing services are deemed "taxi travel" under the GST law.
As a result, thanks to the way GST is collected on taxi travel in Australia, UberX drivers will need to collect GST on every dollar earned, while other 'sharing economy' services will only need to charge GST on incoming exceeding the standard AU$75,000 per year threshold.
Speaking to the ABC's AM program this morning, O'Halloran said the taxi industry has "always had a different rule" when it comes to GST.
"As the tax office, we can only apply the law as it currently stands and the level of income is not relevant for those providing taxi services and has always been the case," O'Halloran said. "In relation to AirBNB and those types of operations, residential rent is not subject to GST but, as usual, people need to declare the income that they derive from such activities."
O'Halloran said ridesharing drivers (and other online- and app-based service providers) will have until August 1 to apply for an ABN and register for the GST. After that date, UberX drivers will be treated the same way as taxi drivers when it comes to tax -- they'll need to charge GST on all fares, lodge Business Activity Statements and report the income on their tax returns, facing fines if they fail to do so.
However, Uber has taken issue with this treatment, publishing a blog post saying "ridesharing is not a taxi service" and the company's 9,000-odd UberX drivers will now be "caught up in red tape before they even accept their first ride." The company would not comment on whether the changes would result in price increases.
Uber's Australian GM, David Rohrsheim, said most UberX drivers earned AU$30,000 a year (well under the usual AU$75,000 threshold for GST) and the change would hit them with an unnecessary regulatory burden. He added that the ATO chose to classify UberX as a taxi service because "current and outdated regulations do not reflect ridesharing as a new model."
"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," he said. "We expect our driver partners to meet their tax obligations like everyone else but they should be treated no differently to any other independently-operated micro or small businesses, and other sharing economy participants."
But Uber's competitors have welcomed the change, with CEO of Australian taxi app company goCatch saying it would "even the playing field" that has allowed overseas players to benefit from tax loopholes "for too long."
For its part, Airbnb will face different treatment to Uber -- according to the ATO's James O'Halloran, Airbnb is classified as "residential rent" and while hosts using the service need to declare the income, they're "not subject to GST at all."
Airbnb's Australian General Manager Sam McDonagh said the company welcomed the announcement, which provided "clarity" for hosts and provided "another signal that the sharing economy is here to stay in Australia."