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Edited version of your written advice
Authorisation Number: 1051456714487
Date of advice: 27 November 2018
Ruling
Subject: GST and ride-sourcing
Question 1
If a car leased by a private company (where you are the director and sole shareholder) is used for ride-sourcing and then the income paid into this company, does this change any GST obligations than if the income was received as a sole trader?
Answer
No, it is the individual who has entered into the services agreement with the ride-sourcing platform that must register for GST.
Question 2
Do the deductions remain the same in this scenario?
Answer
Yes, section 8-1 ITAA 1997 says that deductions can only be claimed to the extent that they are incurred in gaining or producing your assessable income, or incurred in carrying on a business.
You cannot deduct a loss or outgoing to the extent that it is private or domestic in nature, or capital in nature.
Question 3
Is GST only payable once the gross turnover for this company exceeds $75,000 in a given financial year?
Answer
No, as an individual making supplies of ride-sourcing, you must apply for an ABN and register for GST from the commencement of your enterprise.
This ruling applies for the following period:
Date of issue until XX November 20XX
The scheme commences on:
XX November 20XX
Relevant facts and circumstances
You are considering forming a private company with the majority of its earnings unrelated to ride-sourcing and revenue generated in a separate field.
At this stage, and in the course of its current activities, it is projected the level of annual turnover will mean that the company is unlikely to register for GST.
You provided a copy of a services agreement for the platform you will sign up with.
The services agreement also states that at no time can the driver provide someone else their ID and/or login details for the apps or website.
To become a driver entitled to use the app, there are a number of terms and conditions that the individual needs to agree and comply with.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 144
Income Tax Assessment Act 1997 section 8-1
Reasons for decision
Currently, the services agreement only allows individuals to enter into a contract to use the Uber platform [see Recitals clause in the services agreement]. For practical purposes it is the driver in their individual capacity who is signing onto the application and agreeing to the terms and conditions.
Therefore, diverting ride-sourcing income through a private company does not change the fact that you must register for GST as a sole trader.
As an individual driver you are personally providing the ride-sourcing services to your customers (passengers) through the platform and you have the obligation to declare any income received in your yearly tax return. It is important that you declare the income in your individual tax return and not in another entity such as a company, partnership or trust, even if you operate through such an entity in performing other services for a fee.
Running a ride-sourcing enterprise means you must have an Australian business number (ABN) and be registered for GST.
You can get an ABN and register for GST at the same time if you register online, or a registered tax agent can do this for you.
Your GST registration needs to start from the date you started ride-sourcing, regardless of your income.
Once registered for GST as a sole trader, you may be entitled to claim leasing costs for the vehicle leased from the company.