# Some musings on GST and its discriminatory application to rideshare



## Jack Malarkey (Jan 11, 2016)

1. Enterprises providing 'taxi travel' (including rideshare) do not benefit from the annual $75,000 GST threshold available to all other kinds of enterprise.

2. Australia is unique in having such a discriminatory exclusion in its GST/VAT legislation.

3. Uber's response to any amendment of the GST law to remove this discrimination would be of interest.

4. When the Australian Taxation Office confirmed that rideshare fares were subject to GST, Uber increased Australian fares by 10% to pass on the GST liability to riders: see https://www.google.com.au/amp/s/amp...t/news-story/3511483b53368f8967c7b05559db16da.

5. In some cities, this increase came close in time to unrelated reductions in fares.

6. It's feasible that Uber would lower fares by 10% to the extent that GST no longer applied.

7. The relevant explanatory memorandum that accompanied the Bill that became the GST legislation explained that the rationale for those providing 'taxi travel' not having access to the general GST threshold was to avoid having some drivers subject to GST because they were at or above the threshold while having others not subject to GST because they were below the threshold.

8. This might affect the level of fares payable by passengers based on the GST position of their driver. Drivers not registered for GST might charge a lower fare, or reflect the GST in the fare where it was not actually collected and remitted.

9. This demarcation also applies to other kinds of enterprise (for example, cleaning or lawn-mowing) but 'taxi travel' is special in that there would be a many thousands below the threshold and many thousands at or above it.

10. Application of the threshold to taxi travel might also have an economically distorting effect as drivers approaching the threshold cut back their driving to ensure they remained under it.

11. The way I see it is that the threshold needs to be at a level that it excludes from GST all micro-businesses. Otherwise, the GST imposes compliance costs and a level of complexity out of all proportion to the relatively modest levels of revenue raised.

12. There has been only one increase in the GST threshold since GST was introduced from 1 July 2000.

13. From 1 July 2000 to 30 June 2007, the GST threshold was $50,000. From 1 July 2007 onwards, it has been $75,000. (See https://www.aph.gov.au/About_Parlia...oncessions_for_business_in_the_2007-08_Budget).

14. If the GST threshold had been adjusted for inflation since 1 July 2007, it would now be almost $97,000.

15. At this level, it's unlikely that many taxi or rideshare drivers would reach the threshold.

16. So a needed complementary amendment of the GST law would be also to increase the GST threshold to, say, $100,000 and to have annual adjustments thereafter to allow for inflation.


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## Jack Malarkey (Jan 11, 2016)

I plan to pursue these GST issues over this financial year. I'll be seeking:

(1) the removal of the legal discrimination against rideshare and taxi drivers so that they benefit from the same GST turnover threshold as all other businesses (currently $75,000); and

(2) a significant increase in the GST turnover threshold and annual indexation of the threshold.

I envisage an announcement in the 2020-21 Budget in May 2020 and the changes to apply from 1 July 2020.

I realise that my prospects for success may be slim but I'll give it a go. I'll be inviting other drivers to assist.

My first step is to request a constituent meeting with Senator Zed Seselja either at Parliament House or in his electorate office. I recently made that request and I am awaiting a response.

Senator Seselja is a Liberal senator for the ACT and is also Assistant Minister for Finance, Charities and Electoral Matters (in the Treasury portfolio): https://treasury.gov.au/the-department/about-treasury/our-ministers.

I'll report back on developments.


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## Dan Mation (Dec 24, 2018)

Werd up gee.

It's clearly a mistake in the legislation.

Whether there are enough votes in it to make any difference is another matter(?).

I'll poke from my end. All respect to Zed, but he does not tend to get much done. The ACT senate is a two horse race - it's sown up. We'll not have real senators until we have 5+.


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## Jack Malarkey (Jan 11, 2016)

Dan Mation said:


> Werd up gee.
> 
> It's clearly a mistake in the legislation.
> 
> ...


The explanatory memorandum to the Bill makes it clear that the discrimination was deliberate. I refer to the stated rationale in paragraph 7 of my original post.

I am approaching Senator Seselja as he has access to the current Government's decision-making processes.


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## Sandhills (Feb 9, 2018)

Your efforts to help never cease to amaze...Its also interesting looking from a tax policy perspective why there is any threshold..

My limited understanding is that it was prima facie to encourage small business but more practically when consumption taxes were introduced they calculated out the collection and compliance costs made it uneconomic... Imagine the effort in trying to collect gst from all those micro businesses..

But technology has changed and that may not be the case if so u then have a ( very unpopular) arguement GST operates best with no exemptions and no thresholds

My cynicism is that the real reason for no threshold on cabbies was the ATO put a word in that cashies were a threat to revenue... Again that arguement has been superseded by technology from data matching.

That could be a very good arguement to remove an arbitrary and very discriminatory application of the gst law..there is no longer any need for the lower threshold because there is no longer a cash threat from cabbies and uber .the law council also has a review body which is interested in such things.

If any one can do it your the man... Best of luck and if u succeed we will honour you with the golden cardy spun from Kevin's very locks and rumoured to restore virginity


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## Jack Malarkey (Jan 11, 2016)

Sandhills said:


> Your efforts to help never cease to amaze...Its also interesting looking from a tax policy perspective why there is any threshold..
> 
> My limited understanding is that it was prima facie to encourage small business but more practically when consumption taxes were introduced they calculated out the collection and compliance costs made it uneconomic... Imagine the effort in trying to collect gst from all those micro businesses..
> 
> ...


Spain has no VAT threshold for any kind of business.

The general thinking, however, is that a threshold is justified to keep down the compliance costs of micro businesses and government administration costs having regard to the relatively small amount of GST revenue collected from those businesses.


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## Jules66 (Feb 22, 2017)

P


Jack Malarkey said:


> 1. Enterprises providing 'taxi travel' (including rideshare) do not benefit from the annual $75,000 GST threshold available to all other kinds of enterprise.
> 
> 2. Australia is unique in having such a discriminatory exclusion in its GST/VAT legislation.
> 
> ...


One of the most stupid things is if you are say a cleaner or lawn mower you are effectively prohibited from doing ride share for a few extra dollars as you have to register for gst and all of your other activities you have to pay gst on (I think). If you are a wage earner you are fine. That seems like discrimination to me

Every three year I buy a new (second hand) car. Which I get back about 3k in gst. My gst is usually $250 to $350 a quarter. So there is definately a valid argument that is the overhead worth it. I paid nearly $500 in accounting fees.


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## Jack Malarkey (Jan 11, 2016)

Jules66 said:


> P
> 
> One of the most stupid things is if you are say a cleaner or lawn mower you are effectively prohibited from doing ride share for a few extra dollars as you have to register for gst and all of your other activities you have to pay gst on (I think). If you are a wage earner you are fine. That seems like discrimination to me
> 
> Every three year I buy a new (second hand) car. Which I get back about 3k in gst. My gst is usually $250 to $350 a quarter. So there is definately a valid argument that is the overhead worth it. I paid nearly $500 in accounting fees.


Yes, that's correct. Rideshare and taxi drivers need also to pay GST on other business activities including where the total amounts are under the threshold otherwise available.

Businesses benefiting from the threshold (currently $75,000) can, if they fall under the threshold, still CHOOSE to register for GST and benefit from GST credits, subject to a requirement that generally applies of remaining registered for at least 12 months: see https://www.ato.gov.au/business/gst/registering-for-gst/.

I envisage that rideshare and taxi drivers would receive the same GST treatment as all other kinds of business and that the threshold apply at a level that excludes all micro businesses from being obliged to register for GST.


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## Smythe-Brownson-Brown (Jun 24, 2019)

The ATO is chasing small business in general as it is easier. They are not chasing Uber though. Didn't Uber have a $750 million profit in Australia but only payed a small amount of tax due to transferring the profit offshore?


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## Sandhills (Feb 9, 2018)

I thought I read uber has the ATO chasing them. Anyone see any articles?


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## Jack Malarkey (Jan 11, 2016)

Sandhills said:


> I thought I read uber has the ATO chasing them. Anyone see any articles?


See this original post by @Hugh G: https://uberpeople.net/threads/various-taxmen-come-knocking-on-ubers-door.332513/.


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## Ivan B (Feb 13, 2018)

Jack Malarkey said:


> es, that's correct. Rideshare and taxi drivers need also to pay GST on other business activities including where the total amounts are under the threshold otherwise available.


That is so sad, in the case of a guy with a lawnmowing business that is not doing too good, one option would be for him to take advantage of the flexibility of Uber to utilise his downtime (bad weather, winter etc) to bolster his bottom line.
If he does that he would have to pay GST on all his income including lawn mowing, placing him at a disadvantage with his competitors.
It is just wrong, it is discrimination, there is no justifiable reason for this injustice.


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## Jack Malarkey (Jan 11, 2016)

Ivan B said:


> That is so sad, in the case of a guy with a lawnmowing business that is not doing too good, one option would be for him to take advantage of the flexibility of Uber to utilise his downtime (bad weather, winter etc) to bolster his bottom line.
> If he does that he would have to pay GST on all his income including lawn mowing, placing him at a disadvantage with his competitors.
> It is just wrong, it is discrimination, there is no justifiable reason for this injustice.


I'll ensure that I bring this point out in my representations.

We also see its practical application where those drivers who engage in rideshare and Uber Eats deliveries pay GST on both sources of income without the benefit of the $75,000 threshold.

On the other hand, those who do Uber Eats deliveries without any rideshare do benefit from the $75,000 threshold without needing to pay GST.

This treatment would also be expected to stifle and hinder those involved in innovative start-ups that are still at the micro business level where they choose rideshare to help them through.


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## Smythe-Brownson-Brown (Jun 24, 2019)

Happy to pay GST. But Guber should add GST to our earnings, as per standard invoices, and not require us to fork out GST from our existing earnings.


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## Dan Mation (Dec 24, 2018)

Now businesses will need to look at capital gains tax for Uber rides: https://mobile.abc.net.au/news/2019-07-08/no-tax-breaks-for-employers-using-uber/11283184?pfm=sm

So that'll be fun. Some government department were coming over to rideshare in Canberra. Reckon that'll put a hole it in.


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## Jack Malarkey (Jan 11, 2016)

Dan Mation said:


> Now businesses will need to look at capital gains tax for Uber rides: https://mobile.abc.net.au/news/2019-07-08/no-tax-breaks-for-employers-using-uber/11283184?pfm=sm
> 
> So that'll be fun. Some government department were coming over to rideshare in Canberra. Reckon that'll put a hole it in.


Actually, fringe benefits tax (FBT) rather than capital gains tax (CGT).

See https://uberpeople.net/threads/no-f...ks-for-employers-using-uber-for-staff.338508/.


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## Dan Mation (Dec 24, 2018)

Err, yes, that's the thing.

(Was just doing my taxes with CGT, ha).


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## Jack Malarkey (Jan 11, 2016)

If you wish to communicate with the Treasurer to request legislative amendments to ensure that the GST threshold is available to rideshare and taxi drivers and others providing taxi-like travel and to increase the threshold to $100,000 with annual indexation adjustments, you can do so via https://treasury.gov.au/the-department/contact-us/ministerial-correspondence.

Be sure to request a reply.


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## Kyanar (Dec 14, 2017)

Jack Malarkey said:


> I'll ensure that I bring this point out in my representations.
> 
> We also see its practical application where those drivers who engage in rideshare and Uber Eats deliveries pay GST on both sources of income without the benefit of the $75,000 threshold.
> 
> On the other hand, those who do Uber Eats deliveries without any rideshare do benefit from the $75,000 threshold without needing to pay GST.


Actually, they do not. Uber increases their commission to 30% for Eats Only drivers (35% if bicycle).


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## UberDriverAU (Nov 4, 2015)

Kyanar said:


> Actually, they do not. Uber increases their commission to 30% for Eats Only drivers (35% if bicycle).


They still do benefit because no other business activity is effected in the same way when doing Eats only.


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## Jack Malarkey (Jan 11, 2016)

Kyanar said:


> Actually, they do not. Uber increases their commission to 30% for Eats Only drivers (35% if bicycle).


Uber's practice must vary. In Canberra, for example, the Eats service fee is 5% in every circumstance.


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## Kyanar (Dec 14, 2017)

Jack Malarkey said:


> Uber's practice must vary. In Canberra, for example, the Eats service fee is 5% in every circumstance.


It does. Wildly. I see Canberra has Eats surge (neither Brisbane nor Sydney do) but also pays significantly less base. See:

Sydney - 30%-35% service fee, $5.50 pick up, $3.50 drop off, $2.20/km, no surge
Brisbane - 30%-35% service fee, $6.10 pick up, $2.90 drop off, $0.90/km, no surge
Canberra - 5% service fee, $3.20 pick up, $2.00 drop off, $0.90/km, up to $10 surge


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## hretiuis (Jul 16, 2019)

Whether there are enough votes in it to make any difference is another matter(?).


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## Ubereater (Dec 25, 2015)

Jack Malarkey said:


> I plan to pursue these GST issues over this financial year. I'll be seeking:
> 
> (1) the removal of the legal discrimination against rideshare and taxi drivers so that they benefit from the same GST turnover threshold as all other businesses (currently $75,000); and
> 
> ...


Good Gawd ! How many do you reckon extra ants hit the road, especially on weekends if this dream of yours become reality.


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## Grumpy Old Man (Jul 7, 2018)

Ubereater said:


> Good Gawd ! How many do you reckon extra ants hit the road, especially on weekends if this dream of yours become reality.


Why does that matter?
The playing field should be level and fair, the market will take care of the rest.


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## Ubereater (Dec 25, 2015)

^^ Right !:biggrin:


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## Jack Malarkey (Jan 11, 2016)

Ubereater said:


> Good Gawd ! How many do you reckon extra ants hit the road, especially on weekends if this dream of yours become reality.


I suspect that the two contemplated changes to the GST law would be likely to result at most in a modest increase in the number of rideshare and taxi drivers.

At least some of the drivers find out about the present GST requirements only after they have signed up and started driving passengers.

The main effects would be a reduction in compliance and administration costs and a small reduction in government revenue.

Even if caps on the number of rideshare drivers are desirable and feasible, having a discriminatory and burdensome tax is not a transparent or economically efficient way to do it.


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## UberDriverAU (Nov 4, 2015)

Jack Malarkey said:


> Even if caps on the number of rideshare drivers are desirable and feasible, having a discriminatory and burdensome tax is not a transparent or economically efficient way to do it.


If only politicians had such criteria in mind when designing and reforming our tax system. It would be a very different beast to what it is today.


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## Jack Malarkey (Jan 11, 2016)

I am pondering the following situation.

Nellie and George have a chauffeur business operating two cars using a company structure. Their company pays GST from the first dollar like all other operators. However, two cars can do over $75,000 (or higher threshold).

If the changes to GST were given effect to, would operators like Nellie and George be unfairly disadvantaged?

Should the present system remain?


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## UberDriverAU (Nov 4, 2015)

Jack Malarkey said:


> I am pondering the following situation.
> 
> Nellie and George have a chauffeur business operating two cars using a company structure. Their company pays GST from the first dollar like all other operators. However, two cars can do over $75,000 (or higher threshold).
> 
> ...


I don't think your example is too different to any other type of business that exceeds the threshold once it becomes large enough. If you're going to have a threshold, I think the vast majority of single person small businesses should fall below the threshold to reduce their red tape.

Just throwing out an idea Jack. If we are to keep GST applicable to every "taxi and limo fare", then at least allow other business income for sole traders to be GST free up to the threshold. The GST exclusive value of all fares would count towards the threshold.


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## UBER_TOP_PARTNER (Jul 1, 2016)

The ATO have been trying to bluff me for the past 4 YEARS to pay GST. In that time, I’ve had numerous correspondence with the ATO and wracked up 20,000 jobs! A number of times during that period, the ATO in their correspondence have changed the goal posts to suit their argument!

This topic is by no means a cut and dried thing and the ATO know it!!


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## Jack Malarkey (Jan 11, 2016)

UBER_TOP_PARTNER said:


> The ATO have been trying to bluff me for the past 4 YEARS to pay GST. In that time, I've had numerous correspondence with the ATO and wracked up 20,000 jobs! A number of times during that period, the ATO in their correspondence have changed the goal posts to suit their argument!
> 
> This topic is by no means a cut and dried thing and the ATO know it!!


What is the essence of your argument?


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## UBER_TOP_PARTNER (Jul 1, 2016)

Jack Malarkey said:


> What is the essence of your argument?


We resemble more a courier than a taxi driver! The Fair Work Commision's later ruling as an independent contractor!


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## UberDriverAU (Nov 4, 2015)

UBER_TOP_PARTNER said:


> We resemble more a courier than a taxi driver! The Fair Work Commision's later ruling as an independent contractor!


Ahhh no. A courier delivers parcels, we "deliver" people.


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## UBER_TOP_PARTNER (Jul 1, 2016)

That’s you not me! If it was that black and white...I would have been forced to pay the GST years ago. I’ve had extensive correspondence with the ATO over years and they’re anything, but confident in their correspondence. As I’ve said...they’ve changed the goal posts in their correspondence with me a number of times.


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## UberDriverAU (Nov 4, 2015)

UBER_TOP_PARTNER said:


> That's you not me! If it was that black and white...I would have been forced to pay the GST years ago. I've had extensive correspondence with the ATO over years and they're anything, but confident in their correspondence. As I've said...they've changed the goal posts in their correspondence with me a number of times.


So you do not carry people in your car that have paid you to do so?


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## Kyanar (Dec 14, 2017)

UBER_TOP_PARTNER said:


> That's you not me! If it was that black and white...I would have been forced to pay the GST years ago. I've had extensive correspondence with the ATO over years and they're anything, but confident in their correspondence. As I've said...they've changed the goal posts in their correspondence with me a number of times.


Unless you only do Eats, you're clearly a taxi service for the purpose of the New Tax System (GST) Act. You're going to be up for heavy fines, interest and penalties when they finally get sick of dealing with your crap and sic the enforcement division onto you.


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## UBER_TOP_PARTNER (Jul 1, 2016)

Because, you know it all...they’ve had 4 years of correspondence with me to do as you say! 

I’ve always declared ALL my earnings to the ATO. This difference of opinion with the ATO has nothing to do with evading or avoiding tax. Rather a difference of opinion...which they are clearly struggling legally to deal with!

The later Fair Work decision to uphold Uber’s claim that drivers are independent contractors stuffed up the ATO’s previous stance! And no I don’t charge anyone anything!

Start living outside the square and stop being a good sheep!


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## UberDriverAU (Nov 4, 2015)

UBER_TOP_PARTNER said:


> And no I don't charge anyone anything!


You are getting a reward from someone for carrying pax in your car, so whether you're directly charging those pax isn't relevant. The Federal Court has already ruled that this exact activity constitutes "taxi travel" for the purposes of GST, so you would need to get that judgement overturned by a higher court to win your argument with the ATO.


UBER_TOP_PARTNER said:


> This difference of opinion with the ATO has nothing to do with evading or avoiding tax. Rather a difference of opinion...which they are clearly struggling legally to deal with!


So you have lodged BASes and paid GST? That's the only way you're not evading your GST liability.


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## UBER_TOP_PARTNER (Jul 1, 2016)

Not here to debate it with you. I've actually been corresponding with the ATO! Anyone interested in my dealings with the ATO can email me at [email protected]


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## UberDriverAU (Nov 4, 2015)

UBER_TOP_PARTNER said:


> Not here to debate it with you. I've actually been corresponding with the ATO! Anyone interested in my dealings with the ATO can email me at [email protected]


Your house of cards is bound to come tumbling down sooner or later. You certainly can't say you weren't warned. And the penalties are harsher for deliberate tax avoidance.


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## Bostic (Dec 14, 2017)

Does anyone know the answer to these 4 questions on FUber and GST.
1. When you delivery Eats only with a car, the fee is 30% and if you do Rideshare+Eats it is 25%. 
Is the extra 5% FUber takes from the weekly payment to pay the GST for the Eats only driver who is not GST registered?
2. When the Eats only drivers are not GST registered, why does FUber still issue an Invoice to restaurants with GST showing when the Eats Drivers are not registered for GST. As FUber is issuing the Invoices to the Restaurant on the drivers behalf?
3. If you are an Eats only driver here in Australia, does FUber issue you with a Partner Invoice each week?
A number of mates have been driving eats only for 6 weeks now with no partner invoices on their web portal. They asked me but as I do Rideshare+Eats I have no idea.
4. Is there any Uber Eats only drivers who are paying the 30% to Fuber and the 10% GST to the ATO because of other business ventures that put them over the $74k?

Seems FUber has found a way to rip off the car drivers in another way.
I heard that the opposition (MenuLog) actually pays the driver an extra 10% when they advise they are registered for GST.

BTW, in you example with the Lawn Mower etc, if they start driving for Rideshare, they need to register and pay GST on the lawn mowing as well. The guy who does my lawns charges me $80 and if he is not GST registered, then when he gets registered he will need to charge me $88. 
Also on the other hand if a business does not exceed the $74,000 and is no longer registered for GST, then they need to take 1/11th off the bill and change their invoices to be Ex GST.

Seems a lot of Rideshare drivers think the GST is theirs when in fact it is the ATO's.


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## Jack Malarkey (Jan 11, 2016)

Bostic said:


> Does anyone know the answer to these 4 questions on FUber and GST.
> 1. When you delivery Eats only with a car, the fee is 30% and if you do Rideshare+Eats it is 25%.
> Is the extra 5% FUber takes from the weekly payment to pay the GST for the Eats only driver who is not GST registered?
> 2. When the Eats only drivers are not GST registered, why does FUber still issue an Invoice to restaurants with GST showing when the Eats Drivers are not registered for GST. As FUber is issuing the Invoices to the Restaurant on the drivers behalf?
> ...


I can't comment in any detail on these questions and can only make a few tangential observations. That's largely because I haven't seen the contractual and other documentation for all three parties.

Restaurants typically pay a service fee to Uber of up to 35%. This bears no relationship to the amounts paid to drivers for deliveries.

Nor is their any relationship between the delivery fee paid by the consumer of the food and the amounts paid to the driver to deliver it.

The service fees payable by drivers to Uber can vary. For example, in Canberra (where I drive), the service fee is always 5% irrespective of whether the delivery partner uses a car, bicycle or motor bike and irrespective of whether the delivery partner is registered for GST.

(The base amounts in Canberra are lower than those that typically apply in other cities.)

Liabilities for GST arise independently of whether or not the supplier has passed on the GST component in higher prices to the consumer.

In the example of the rideshare driver who also has a lawn mowing business, the person concerned doesn't register for GST separately for the two businesses but uses the one registration for both.

The position is different if there are different legal entities involved including where the driver operates as a sole trader for the rideshare business and via a partnership for the lawn mowing business. In that kind of case, separate GST registrations are needed.


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