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Edited version of your written advice
Authorisation Number: 1051249768731
Date of advice: 27 July 2017
Ruling
Subject: Ride-sourcing
Question 1
Where in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) does it state that ride-sourcing providers (drivers) are responsible to pay the GST on the total amount received by a ride-sourcing facilitator?
Answer
Section 9-40 of the GST Act states that you must pay the GST payable on any taxable supply that you make. Your supply of taxi travel is a taxable supply and the GST payable is calculated on the full 'consideration’ – the full fare paid.
Question 2
What is the ATO view on the treatment of the booking fee that has been introduced by a ride-sourcing facilitator?
Answer
The ATO view is that the booking fee is treated as part of the total fare paid by the passenger for which you are liable for GST.
Relevant facts and circumstances
You are a ride-sourcing driver who is registered for GST.
You entered into a Services Agreement with certain ride-sourcing entities as part of commencing your enterprise. In entering that agreement, you agreed to the following clauses:
You acknowledge and agree that X is a technology services provider that does not provide transportation services, function as a transportation carrier, nor operate as an agent for the transportation of passengers.
1.9 “Transportation Services” means your provision of P2P passenger transportation services to Users via the Y Services in the Territory using the Vehicle.
2.3 Your Relationship with Users. You acknowledge and agree that your provision of Transportation Services to Users creates a legal and direct business relationship between you and the User, to which X and its Affiliates are not a party. […]
4.1 Fare Calculation and Your Payment […] You: (i) appoint X as your limited payment collection agent solely for the purpose of accepting the Fare, applicable Tolls and, depending on the region and/or if requested by you, applicable taxes and fees from the User on your behalf via the payment processing functionality facilitated by the Y Services; and (ii) agree that payment made by User to X shall be considered the same as payment made directly by User to you. […]
4.4 Service Fee. In consideration of X’s provision of the Y Services, you agree to pay X a service fee on a per Transportation Services transaction basis calculated as a percentage of the Fare (regardless of any Negotiated Fare), as provided to you via written correspondence or otherwise made available electronically by X from time to time for the applicable Territory (“Service Fee”). Unless regulations applicable to your Territory require otherwise, taxes will be calculated and charged on the Fare, and X shall calculate the Service Fee based on the Fare inclusive of such taxes. […]
4.8 Taxes. You acknowledge and agree that you are required to: (a) complete all tax registration obligations and calculate and remit all tax liabilities related to your provision of Transportation Services as required by applicable law; and (b) provide X with all relevant tax information (including a valid relevant number belonging to you, if obtaining a relevant number is required of you by applicable law). You further acknowledge and agree that you are responsible for taxes on your own income arising from the performance of Transportation Services. Notwithstanding anything to the contrary in this Agreement, X may in its reasonable discretion based on applicable tax and regulatory considerations, collect and remit taxes resulting from your provision of Transportation Services and/or provide any of the relevant tax information you have provided pursuant to the foregoing requirements in this Section 4.8 directly to the applicable governmental tax authorities on your behalf or otherwise.
You have been informed that drivers are responsible for 1/11th of the total amount paid by the passenger. As a driver, you only receive 75% of what the passenger pays directly to the ride-sourcing facilitator.
Recently, the ride-sourcing facilitator introduced a booking fee of 55 cents, charged to the passenger as part of their fare. This amount is not paid to the driver and the ride-sourcing facilitator have stated it is to cover administration costs.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Division 9.
A New Tax System (Goods and Services Tax) Act 1999 Division 144
Reasons for decision
Question 1
Section 144-5(1) of the GST Act states that you are required to be registered if, in carrying on your enterprise, you supply taxi travel. On 17 February 2017 the Federal Court of Australia handed down its decision that ride-sourcing is taxi travel (Uber B.V. v Commissioner of Taxation [2017] FCA 110).
Section 9-5 of the GST Act states:
You make a taxable supply if:
(a) you make a supply for consideration; and
(b) the supply is made in the course or furtherance of an enterprise that you carry on; and
(c) the supply is connected with the indirect tax zone; and
(d) you are registered, or required to be registered.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
When you supply taxi travel to your passengers, you make a supply for consideration which is the fare charged to the passenger. You make that supply as part of your enterprise of providing taxi travel and that supply is in Australia. You are registered for GST and a supply of taxi travel is neither GST-free or input taxed.
Therefore, your supplies of taxi travel to passengers are taxable supplies.
Section 9-40 of the GST Act states:
You must pay the GST payable on any taxable supply that you make.
GST must be calculated on the full fare, not the net amount you receive after deducting any fees or commissions. For example, if a passenger pays $55 and the facilitator pays you $44 (after deducting an $11 commission) the GST payable is $5 (not $4).
This is because, under the terms of the Services Agreement that you entered into, X act as your limited payment collection agent. You agreed that payment made by a passenger to X shall be considered the same as payment made directly by the passenger to you (See clause 4.1 of the Services Agreement).
Facilitation services (referred to as a Service Fee in clause 4.4 of the Services Agreement) provided by X to you are distinct from the ride-sourcing services provided by you to passengers. Ordinarily, when X collects the fare for you it deducts its service fee payable by you before passing the remaining amount on to you. This payment mechanism does not affect the amount of the full fare for the purpose of working out the amount of GST that you are liable to, even though the amount received by you is less than the full fare.
Question 2
The ATO view of the GST treatment of the booking fee is based on our understanding of the contractual arrangements in place between X, its driver partners and passengers.
There are two separate booking fees involved in the arrangement: (1) a booking fee charged by Y to the drivers; and (2) a booking fee charged by the driver to the passenger.
The arrangement is structured such that the booking fee paid to Y by the drivers is $0.05 less than the separate booking fee paid to the driver by a passenger. This is to ensure that drivers are not in a net loss position after taking into account their GST liability on the $0.55 booking fee they receive from the passenger.
Therefore, the booking fee paid to the driver by a passenger is treated as part of the total fare paid by the passenger for which you are liable for GST.
In your private ruling application you made reference to X having offices in Australia. You need to be aware that the entities you are transacting with through your Services Agreement may not be the same entities that are based in Australia.
As mentioned, section 9 5 of the GST Act (taxable supply) requires that the supply is connected with the indirect tax zone. The entity to which you pay the facilitation fee makes supplies that are not connected with the indirect tax zone. Therefore, their supply is not a taxable supply and does not include GST.
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