news Ride-sharing company Uber has taken the Australian Taxation Office to court over the agency’s insistence that drivers providing its ride-sharing service collect GST the same way taxi cabs do, in a move that represents Uber’s latest legal battle against the taxi industry.
Earlier this year the ATO issued a ruling stating that ride-sharing services were no different than taxi services for the purposes of collecting GST. The agency’s ruling states:
“If you provide ride-sourcing services, you are providing ‘taxi travel’ services. This is because you make a car available for public hire and use it to transport passengers for a fare. Under the GST law, if you carry on an enterprise and provide taxi travel services in that enterprise, you are required to be registered for GST regardless of your turnover.”
However, in a statement today, Uber noted that it was “disappointed” by the ruling and would seek legal options to have it overturned.
“Uber aspires to make transportation as reliable as running water,” the company said. “It started as a side project for a small group of friends but we quickly found that everyone loves the ability to push a button and get a ride. In the process, it also became clear that many hundreds of thousands of people wanted to become driver-partners because of the the flexibility that Uber provides. In a recent survey, over 80 percent of Uber driver-partners said that they use our platform because they love choosing when, if and how much they work.”
“This is why we are so disappointed that the Australian Tax Office (ATO) has tried to deny these people the same tax treatment as other individuals, who are only required to register for goods and services tax (GST) once they reach a turnover of more than $75,000 a year. Instead, they are suggesting that Uber’s driver-partners must register and remit this tax from the first dollar earned.”
“So on Friday we filed an application with the Federal Court to challenge the ATO’s position, which we believe clearly and unfairly targets Uber’s driver-partners. In our view, the ATO’s guidance should not have been issued when a federal tax review is underway and as the ATO has agreed that this is “an uncertain point of the law”.”
To be very clear, Uber’s statement said, the company believed all its driver-partners should pay their apropriate share of tax and meet their tax obligations.
“However, we feel they have been unjustly singled out by the ATO for different tax treatment than truck drivers, bike messengers, Airbnb hosts or any other participant of the sharing economy,” the company said. “Over fifty jurisdictions around the world have recognised ridesharing as a new model requiring updated regulations that reflect its unique attributes. The guidance by the ATO has tried to fit a new technology model from today into a 1990’s regulatory framework that was written long before this technology ever existed. Common sense would tell you that isn’t going to work.”
“The Federal Government through its current comprehensive tax review, not the ATO, needs to define how ridesharing and the sharing economy fits into the modern tax system and we look forward to seeing their recommendations.”
Uber is currently fighting a number of running battles across jurisdictions in Australia and globally, as it fights to have its pioneering service compete legally with the entrenched taxi industry.
Personally, I’m not sure whether uberX drivers should collect GST or not. However, I do know that there should be a level playing field for the entire personal transportation industry. If the taxi companies are forced to collect GST, then so should people regularly charging for transport services through Uber and similar services. And if the taxi companies are not forced to collect GST, then neither should the ridesharers. A level playing field ensures everyone can compete fairly — that should be a basic.
You can understand why someone merely giving someone else a lift in their car should not have to collect GST, if that person pays them for the ride. But if this is done on a professional basis — if a regular income is being earned, with a large company such as Uber acting as an intermediary — then that income should be taxed on a similar basis to taxi cab companies — either way, GST or not.
Image credit: Uber