By Rachel Liang
Edited for online by Tobi Loftus
Ride-sharing app Uber is facing a crackdown from the Australian Tax Office, who are making its drivers pay GST from August 1.
The usual $75,000 threshold will not apply, so all Uber drivers will be affected.
The ATO ruled Uber as a taxi service and said the apps drivers will have to get an ABN and register for GST.
Uber’s Public Policy Director Brad Kitchske told the ABC radio he was concerned and disappointed over the announcement.
“It’s a ruling that’s based on interpretation of the legislation as it was written in 1996,” Mr Kitchske said.
“This is a ruling that hasn’t taken into consideration the modernisation of point to point transport.”
Mr Kitchske said it was unfair the threshold does not apply.
“We certainly don’t think Uber partners shouldn’t be captured by the taxation system,” he said.
“Our main point is that Uber partners like the hundreds of thousands of other small and microbusinesses should be subjected to exactly the same rules and should be allowed the threshold.”
ATO Deputy Commissioner James O’Halloran said the tax office was applying the law as it stands.
“The level of income is not relevant to those providing taxi services and has always been the case,” Mr O’Halloran said.
“I think it’s important to point out the obligations on the so-called driver providing the services rather than any entity itself.”
H&R Block Tax Communications Director Mark Chapman said the business models have created difficulties for the ATO.
“The issue with the Tax office is they’ve kind of struggled with the so called sharing economy businesses like Airbnb and Uber and even eBay to a certain extent,” Mr Chapman said.
“They don’t fit within the traditional context of what a business looks like and therefore some of the existing tax laws can be quite difficult to apply.”
Mr Chapman said benefits would exist in making Uber drivers pay GST.
“The only upside is if the drivers have any purchases on which they suffer GST, they can now claim back that GST,” he said.
“Though I suspect the amount of GST they’ll be paying will be greater than the amount they’re paid back.”
Uber is expected to challenge the ATO’s decision.