In a recent case the Federal Court of Australia has handed down its decision that ride-sourcing is taxi travel.
What is ride-sourcing?
Ride-sourcing is an ongoing arrangement where:
- you (a driver) make a car available for public hire
- a passenger uses, for example, a website or smart phone app provided by a third party (facilitator) to request a ride, for example Uber, GoCar and others
- you use the car to transport the passenger for payment (a fare) with a view to profit.
Ride-sourcing arrangements can be enabled by a technology platform maintained by a third-party facilitator. Typically, a website or mobile device application is used to facilitate a transaction between a driver and a passenger.
Under GST law, if you carry on an enterprise and provide taxi travel services in that enterprise, you are required to be registered for GST regardless of your turnover.
An enterprise is an activity done in the form of a business. If you provide ride-sourcing services to the public you are likely to be carrying on an enterprise.
What you need to do
If you do not have an Australian business number (ABN) and are not registered for GST, you must get an ABN and register for GST as soon as possible.
If a passenger requests a tax invoice, not just an invoice, for a fare over $82.50 (including GST) you must provide one. If the facilitator cannot do this on your behalf, use a tax invoice book with your ABN on it.
You are required to lodge business activity statements (BAS) and pay any GST on the full fare received from passengers for each trip by the due date.
Income tax consequences
Unless you have made other formal arrangements in relation to your business structure you will be a sole trader, ie providing ride-sourcing services. As a sole trader you use your tax file number (TFN) when lodging your income tax return and must include income from ride-sourcing services. Expenses you incur in running the ride-sourcing business will also be deductible.
If you incur an expense that is both related to your business and is private or domestic in nature, you can only claim a deduction for the work-related proportion of the expense.
Claiming car expenses
The Australian Taxation Office (ATO) anticipates that most ride-sourcing drivers will use their car for both personal and business use. This means you will need to apportion any car expenses deductions between personal and business use.
The ATO uses data-matching to identify people who provide ride-sourcing services to ensure that they comply with the taxation law.
If you are an Uber driver and unsure of you obligations please contact our Tax Accountants on 9223 9166 or submit an online enquiry form today.