• Ride-sourcing - the facts

    Key facts

    • Since the introduction of the GST, if you supply “taxi travel” you are required to be registered for GST.
    • When the GST law was introduced, “taxi travel” was overtly considered, due to overseas experience at the time, to avoid situations where there would be GST-free and non-GST free providers of taxi services. To avoid confusion, it was decided the normal threshold test (now $75,000) would not apply.
    • Over many months, the ATO has examined the increasing level of ride-sourcing in Australia and the implications for GST payment.
    • On 20 May the ATO issued public advice that ride-sourcing services are “taxi travel” for the purposes of the GST law. This is because a car is made available for public hire and is used to transport passengers for a fee.
    • The advice published on 20 May contains detailed examples of types of ride-sourcing that are impacted by the ATO position as well as the income tax consequences and other considerations under the GST law to determine if you are operating a business.
    • GST law recognises taxi services as transporting passengers only, therefore other courier services such as trucks and bike couriers are not included.
    • The public advice contains specific considerations and examples to assist those involved in ride-sharing to make decisions about their GST and income tax obligations.

    When does it apply from?

    To assist drivers who need to consider their individual circumstances, we allowed a transition period up until 1 August before the ATO expected GST to be collected.

    You do not need to do anything if you engage in:

    • non-commercial car-pooling arrangements where passengers contribute "petrol money" (or other arrangements where there is no view to profit)
    • car sharing arrangements where multiple users have access to a car which they use to drive themselves from one location to another
    • arrangements that use vehicles other than cars, for example motorised tricycles
    • arrangements where a car is used only to transport passengers for a particular purpose (for example, a wedding or a funeral procession) and which is not made available more generally to transport members of the public from one place to another.

    What does it mean for ride-sourcing drivers?

    You should review the detailed ATO guidance to consider your individual circumstances.

    Those providing a ride-sourcing service, as outlined in the advice, need to have an ABN and be registered for GST.

    How do you calculate the GST?

    GST is payable on the full fare.

    For example, from 1 August a fare of $110 includes an amount of $10 GST. So $10 GST must be paid to the ATO by the driver through monthly or quarterly business activity statements, after claiming any GST credits.

    Ride sourcing facilitators generally collect the full fare through a credit card payment direct from a passenger. Previously GST was not paid, so from 1 August drivers will now need to pay the GST to the ATO. We are aware from community feedback that drivers are concerned this may result in a reduction in their payment.

    While the ATO has no role in commercial arrangements between ride sourcing facilitators and drivers, to recognise the driver’s obligation to pay GST, a ride sourcing facilitator may consider options such as only charging their commission on the GST exclusive fare (such as only calculating their commission on the $100 rather than the $110 fare in the example), reducing their commission on the full fare, or increasing fare rates.

    Deductions and concessions

    It is likely that ride-sourcing drivers are carrying on a business and that they are eligible for deductions and concessions in their tax returns. This could include depreciation deductions and GST input credits.

    What does it mean for passengers using a ride-sourcing service?

    If you do not run (or work for) a GST-registered business, then no, you don’t need to do anything differently.

    If the travel was part of running your GST-registered business (or the business you work for) then you may need to ask for a tax invoice.

    Specifically, passengers using ride-sourcing services:

    • can claim an input tax credit for the fare charged if you are registered for GST and where the travel was part of running your enterprise . This would be 1/11th of the fare.
    • as with taxi services, if the fare is more than $82.50, the driver must give you a tax invoice. If the fare is less, the driver is not required to provide you with a tax invoice, but they may provide a receipt.
    • in many instances your credit card statement details would be sufficient to claim a credit.

    What does the legal challenge mean?

    Taxpayers often challenge the Commissioner’s view but this does not affect our continued administration of the GST law. Similarly, current legal proceedings do also not change the Commissioner’s view on our published guidance, therefore the ATO will continue to support and advise impacted drivers on how to demonstrate their compliance with the law and the ATO position.

    Last modified: 05 Aug 2015QC 46598