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Edited version of your written advice
Authorisation Number: 1012811230961
Ruling
Subject: GST and taxi travel
Question 1
Is the payment you receive from R consideration for a taxable supply?
Answer
Yes.
You are supplying taxi travel as contemplated by Division 144 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Therefore GST applies to the whole amount collected from the client.
You make a taxable supply of taxi travel, the consideration for which is the full amount the client pays, not solely the X% you receive from R.
Relevant facts and circumstances
You are in partnership with R. You use your private car for this partnership. Prospective clients download a R app with which they can call up a R car/driver who transports them from A to B. Payment is made via credit card to R who in tum deposit X% of the payment (fare) to your nominated bank account. No money changes hands between you or the clients.
You will be earning less than $75,000 with R. You need to know whether or not it is necessary to enter R earnings on your Business Activity Statements and whether GST needs to be paid on such earnings.
R refers to this work a 'ride sharing'. R has told you that it has been advised that R drivers do not have to pay GST.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 144-5
Reasons for decision
Summary
GST is levied by you on the full amount the client pays for travel, not just the net amount you receive from R.
Detailed reasoning
The type of enterprise you are undertaking is commonly referred to as 'ride-sourcing'. By ride-sourcing, we mean an ongoing arrangement where you (a driver):
• make your car available for public hire, where passengers may, for example, use a website or smart phone app provided by a third party (facilitator) to search for and contact you, and
• use your car to transport passengers for payment (a fare) with a view to profit.
Ride-sourcing arrangements can be enabled by a technology platform maintained by a third party (a facilitator). Typically, a website or mobile device application is used to facilitate a transaction between driver and passenger.
For GST purposes, if you provide ride-sourcing services, you are providing 'taxi travel'. This is because you make a car available for public hire and use it to transport passengers for a fare.
The existing GST law requires that where you are carrying on an enterprise and providing taxi travel services, then you are required to be registered for GST regardless of your turnover. We consider that you meet these requirements.
As you are required to be registered for GST (and are in fact already registered), GST must be calculated on the full fare as it with by other taxi drivers, not the net amount you receive after deduction of any fees or commissions. For example, if a passenger pays $55 and a facilitator pays you $44 (after deducting an $11 commission), the GST payable is $5 (not $4).
GST credits on your business purchases can be claimed, but must be apportioned between business and private use. For example, if you pay $110 for fuel (including $10 GST), and you use your car 10% for ride-sourcing and 90% for private purposes, you may claim a GST credit of $1 for this purchase.
The Commissioner has just published a view on ride-sourcing on the ATO website (www.ato.gov.au). Part of the published material mentions the policy taken with regards to the timing of applying this ATO view of ride-sourcing. It states:
Recognising the need to allow time for taxpayers to make necessary arrangements the ATO is not intending to apply compliance resources regarding GST obligations for drivers prior to 01 August 2015 except if there is evidence of fraud or other significant matters.
You will however need to report the income from your current activities on your income tax return.
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