Uber takes ATO to Federal Court in battle over GST

The battle over UberX drivers paying GST for ridesharing services has ramped up as Uber takes the Australian Taxation Office to the Federal Court.

Claire Reilly Former Principal Video Producer
Claire Reilly was a video host, journalist and producer covering all things space, futurism, science and culture. Whether she's covering breaking news, explaining complex science topics or exploring the weirder sides of tech culture, Claire gets to the heart of why technology matters to everyone. She's been a regular commentator on broadcast news, and in her spare time, she's a cabaret enthusiast, Simpsons aficionado and closet country music lover. She originally hails from Sydney but now calls San Francisco home.
Expertise Space | Futurism | Robotics | Tech Culture | Science and Sci-Tech Credentials
  • Webby Award Winner (Best Video Host, 2021), Webby Nominee (Podcasts, 2021), Gold Telly (Documentary Series, 2021), Silver Telly (Video Writing, 2021), W3 Award (Best Host, 2020), Australian IT Journalism Awards (Best Journalist, Best News Journalist 2017)
Claire Reilly
3 min read
Uber claims its drivers are independent contractors, rather than employees. Uber

Uber has filed a Federal Court challenge against the Australian Taxation Office, claiming its UberX ridesharing drivers are being "unjustly" slammed with excess GST obligations.

The company says its "driver-partners," the name it gives to members of the public who register to offer ridesharing services under the Uber banner, are being unfairly targeted.

However, the ATO says its position on UberX is consistent with the goods and service tax law, and that "ride sharing services, such as Uber drivers, need to have an ABN and be registered for GST." The Tax Office gave ridesharing drivers a transition period, saying GST would not need to be collected until August 1. That very day, Uber filed its application in the Federal Court to exempt drivers from paying tax.

Since launching ridesharing in Australia in 2014, Uber has faced its fair share of teething problems. Drivers have been hit with legal action and fines, have faced push back from the taxi industry and regulators, and even been met with citizen's arrests by one anti-Uber campaigner.

But the company has long pitched itself as a challenger, saying it is disrupting an outdated transport industry in a bid to "make transportation as reliable as running water." Furthermore, it argues that its UberX drivers are nothing more than independent contractors who are not employed by Uber but who use the company's platform and software to provide their own service.

Uber says it took its challenge to Federal Court because it believed the ATO was "clearly and unfairly" targeting UberX ridesharing drivers.

"We believe all our driver-partners should pay their appropriate share of tax and meet their tax obligations. However, we feel they have been unjustly singled out by the ATO for different tax treatment than truck drivers, bike messengers, Airbnb hosts or any other participant of the sharing economy," the company said in a statement.

"We are so disappointed that the Australian Tax Office has tried to deny these people the same tax treatment as other individuals, who are only required to register for goods and services tax once they reach a turnover of more than AU$75,000 a year.

"Instead, they are suggesting that Uber's driver-partners must register and remit this tax from the first dollar earned."

Uber also argues that "the ATO has agreed that this is 'an uncertain point of the law'."

But the ATO has hit back saying the position on ridesharing is unchanged.

The Tax Office published guidance on May 20 this year, saying that if a driver makes a car available for public hire and a passenger uses "a website or smart phone app provided by a third party (facilitator) to request a ride," then transporting this passenger with a view to profiting off the fare constitutes ridesharing.

The ATO says it does not have a position on the legality of ridesharing, but says the above conditions constitute providing "taxi travel services" and drivers who do this as an enterprise are subject to GST.

"Impacted drivers are reminded that they will need to pay the GST collected through their monthly or quarterly Business Activity Statement," an ATO spokesperson said in a statement. "This published advice is consistent with the current GST law and the long term special provisions that have been in place since the introduction of GST law.

The ATO says it is considering the possible legal proceedings, and the case has been set down for a hearing in the Federal Court on September 1.