Edited version of private advice

Authorisation Number: 1052300869130

Date of advice: 5 September 2024

Ruling

Subject: GST - ride-sharing

Question 1

Are you required to be registered for Goods and Services Tax (GST) in relation to your supply of transporting passengers under section 144-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

Question 2

If the answer to question 1 is yes, are you required to backdate your GST registration to the date of commencement of your enterprise?

Answer

Yes.

Relevant facts and circumstances

You commenced a new enterprise as a sole trader in 20YY.

You carry on an enterprise of transporting passengers to the Airport and Cruise Terminal as an independent licenced operator.

You use your own car or similar vehicle to provide this transport service.

You do not have taxi meter fitted to your vehicle.

The cost of each trip was mutually agreed between you and the passenger based on the pickup point of the passenger and the distance you had to travel from your home to get to passenger's pick-up point.

The pick-up time and location are decided by the passengers.

All airport/cruise terminal transfer jobs are pre booked for a certain duration as mutually agreed between you and the passenger.

You do not accept street or kerbside hails.

You advertise your business through an online website.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

A New Tax System (Goods and Services Tax) Act 1999 section 144-5

Reasons for decision

Question 1 and 2

Summary

Your supply of providing passenger transport for a fare is considered as ride-sourcing under the definition of taxi travel. Therefore, you are required to be registered for Goods and Services Tax (GST) in relation to your supply of transporting passengers under section 144-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

You are required to backdate your GST registration from the day you started your supply of transporting passengers regardless of how much you earn.

Detailed reasoning

You are required to be registered for GST under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if:

(a)           you are carrying on an enterprise; and

(b)           your GST turnover meets the registration turnover threshold.

However, section 144-5 of the GST Act states:

(1)           You are required to be registered if, in * carrying on your enterprise, you supply * taxi travel.

(2)           It does not matter whether:

(a)            your * GST turnover meets the * registration turnover threshold; or

(b)            in * carrying on your enterprise, you make other supplies besides supplies of * taxi travel.

(3)           This section has effect despite section 23-5 (which is about who is required to be registered).

Under section 195-1 of the GST Act taxi travel means travel that involves transporting passengers by taxi or limousine for fare. However, the ordinary meaning of taxi has recently defined by the Federal Court in the Uber decision.

The Federal Court in its decision in Uber B.V. v. Commissioner of Taxation [2017] FCA 110 (Uber) has considered the definition of 'taxi' for GST purposes. The Court found that the ordinary meaning of the word "taxi" is a vehicle available for hire by the public and which transports a passenger at his or her direction for the payment of a fare that will often, but not always, be calculated by reference to a taximeter.'

The Court considered the ordinary meaning of 'taxi' due to it not being a defined term in GST legislation. We consider that it is appropriate to interpret the definition of 'taxi' in the FBT Act in a manner that encompasses the Federal Court's finding.

As a result of the Uber decision, it is our view that the definition of taxi for GST purposes will include a ride-sourcing vehicle or other vehicle for hire. Ride-sourcing, sometimes referred to as ride-sharing, is an ongoing arrangement where:

•         a driver makes a car available for public hire for passengers

•         a passenger uses a third-party digital platform, such as a website or an app, to request a ride, for example, Uber, Shebah, or GoCatch

•         you use the car to transport the passenger for payment (a fare).

Your activity of providing transporting passengers to the airports and cruise terminals for a payment is considered as ride-sourcing. Passengers can contact you to request a ride from the contact details advertised in an online website.

The fact sheet (QC53224) on Ride-Sourcing published by the ATO explains the requirement of all ride-sourcing drivers to have an Australian Business Number (ABN) and be registered for GST from the day they started their ride-sourcing activity regardless of how much they earn.

As explained above, the ride-sourcing is taxi travel for GST purposes. Therefore, the standard GST registration rule for GST turnover of $75,000 or more does not apply when it comes to ride-sourcing. You are required to be registered for GST by backdating your GST registration from the day you have started your ride-sourcing activity.

You advised us that you received licence to transport passengers on in 20YY and commenced your enterprise of providing passenger transport services on this date. Therefore, you are required to be registered for GST since 20YY.