Uber loses GST fight with the Tax Office

BurgerTiime

Well-Known Member
http://www.afr.com/technology/uber-loses-gst-fight-with-the-tax-office-20170215-gudwza

The court case hinged on whether Uber was providing "taxi travel" for the purposes of the GST legislation. The court said yes. Ryan Stuart
by Misa Han

More than 50,000 Uber drivers in Australia will have to pay 10 per cent GST from the first dollar they earn after the ridesharing app lost a 18-month battle with the Australian Tax Office.

In a decision handed down on Friday, the Federal Court rejected Uber's argument that its drivers should not have to pay GST because it is not providing "taxi travel" and ordered Uber pay the Tax Office's legal costs.

The decision confirms Uber drivers will have to pay 10 per cent GST on top of the 25 per cent commission to Uber regardless of how much they earn.

Uber sued the Australian Tax Office in July 2015after the Tax Office declared from August 1, 2015, Uber drivers must pay GST because they are providing a modern equivalent of taxi service.


The court case hinged on whether Uber was providing "taxi travel" for the purposes of the GST legislation. Generally businesses with less than $75,000 turnover do not need to collect GST.


However, this rule does not apply to taxis, which means taxis have to pay GST from the first dollar they earn. If Uber was classified as a provider of "taxi travel" its drivers would also have to pay GST even if they earn less than $75,000 a year.

Justice John Griffith of the Federal Court said the phrase "taxi travel" should be "construed broadly and not technically" and accepted the Tax Office's argument the ordinary meaning of the word "taxi" is a "vehicle available for hire by the public and which transports a passenger at his or her direction for the payment of a fare that will often, but not always, be calculated by reference to a taxi meter".

He said the fact Uber cars did not have taxi meters installed them was irrelevant because it was not essential to the ordinary meaning of the word "taxi".

Uber spokeswoman said the company is disappointed with the decision and will provide its drivers with more information "as soon as we can".


During the two-day hearing in June 2016, Uber argued its drivers should not have to pay GST unless they earn more than $75,000 because they are not providing taxi services.

Uber argued its drivers are not providing "taxi travel" because taxis can pick up passengers without booking using the rank and hail system but Uber cannot.

But the Tax Office quoted a number of dictionary definitions to argue the term taxi should include ride sharing services.

Although Uber drivers have been required to register for GST since August 2015, some drivers have chosen not to register until the court decision came out, Ride Share Drivers' Association of Australia spokesman said. RSDAA represents over 700 Uber drivers.


He said: "As you may know there is a court case between Uber and the ATO currently, so some are taking the view that until there is a judgment either way they'll keep hold of their 10 per cent thanks very much!"

He said the decision was "disappointing news for drivers who are already being pinched by Uber's predatory pricing model."

"It seems the courts can't differentiate between a full time enterprise and a part time pocket money job," he said.

K & L Gates tax partner Matt Cridland said the decision means the government will have to make a policy decision as to whether the $75,000 exemption should apply to Uber and taxi drivers and tax laws need to evolve to deal with technological developments.


"There will be UberX drivers who are casual drivers who will need to pay GST, as opposed to professional drivers who attend to it full-time for their living," he said.

The Tax Office and NSW Taxi Council have been contacted for comment.

-----another article
http://www.news.com.au/finance/busi...s/news-story/cc95dad277da68532609bc93cdd03760
 
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uberdoobie_uberdoobie

Active Member
I wonder if they can appeal.
Oh..they will appeal alright ... make no mistake ...this ruling has more to do with hitting Uber bigtime... dont be fooled by the Uber rhetoric that they are 'concerned and acting on behalf of drivers"... yeah, right, as if? ...
this is about ATO coming after Uber (not just for GST) ... the taxman cometh... and hell's coming with him!!!
 

CoolAnt

Well-Known Member

evil

Well-Known Member
why hasn't the Judge made reference to the current threshold of earning under 75K? Still makes no sense why the rule exists for taxi's too.
While I agree that Uber drivers are also taxi's in the general term, they also run their own business. Are taxi drivers also "running their own business" ?

Do current taxi drivers run their own business the same way? I thought all their earnings go to the taxi plate owner and they keep a profit. I have no idea how taxi drivers make their money but would be good to know for comparison.
 

CoolAnt

Well-Known Member
why hasn't the Judge made reference to the current threshold of earning under 75K?
While I agree that Uber drivers are also taxi's in the general term, they also run their own business. Are taxi drivers also "running their own business" ?

Do current taxi drivers run their own business the same way? I thought all their earnings go to the taxi plate owner and they keep a profit. I have no idea how taxi drivers make their money but would be good to know for comparison.
I'm no authority on this topic but i believe that some taxi drivers are in fact independent contractors as well.
 

M3uber

Well-Known Member
So does this ruling mean we are now paying GST (back to ATO) on net payout fares, as Uber is required to pay their GST on the commission they collect?
In summary, before the ruling: example $100 fare, Uber keeps $20 and pays nothing to ATO. Drivers pay GST on $100.
After ruling: $100 fare, Uber pays ATO GST on $20, drivers pay GST on $80 payout.

Is this correct?
 

matPORTS

Well-Known Member
So does this ruling mean we are now paying GST (back to ATO) on net payout fares, as Uber is required to pay their GST on the commission they collect?
In summary, before the ruling: example $100 fare, Uber keeps $20 and pays nothing to ATO. Drivers pay GST on $100.
After ruling: $100 fare, Uber pays ATO GST on $20, drivers pay GST on $80 payout.

Is this correct?

Drivers still required to collect GST from the full fare and remit it to the ATO each quarter.

So yes - Uber pays no GST.

This will not change.
 

evil

Well-Known Member
So does this ruling mean we are now paying GST (back to ATO) on net payout fares, as Uber is required to pay their GST on the commission they collect?
In summary, before the ruling: example $100 fare, Uber keeps $20 and pays nothing to ATO. Drivers pay GST on $100.
After ruling: $100 fare, Uber pays ATO GST on $20, drivers pay GST on $80 payout.

Is this correct?
No. Its still as normal. Drivers pay $20 to uber, $9.09 ($100/11) to ATO and drivers keep the change from $100.
 

M3uber

Well-Known Member
So whats the point of ATO making a ruling that Uber has to pay GST and they still don't?
 

uberdoobie_uberdoobie

Active Member
gee I love the tax advice from all the tax experts on this forum ... Uber should have ditched the silks they used in court case and got their defence briefings here in the forum ...:rolleyes:
 
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