# ATO live chat – Q&A ride-sourcing and tax



## MichaelATO

Hi UberPeople.net members

I'm Michael Hardy, Assistant Commissioner at the ATO and I'll be here for *1 hour* from *6:30pm AEDT* next Wednesday to chat with you and answer your questions about how tax applies to your ride-sourcing services and we're here to help. Please start sending through your questions now and we'll make sure we have answers for them on the day.

*Watch this thread for updates and we'll see you next week from 6:30pm. *


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## UberX.illegal?

At least the ATO calls driving for uberx with correct term ride sourcing NOT ride sharing.


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## SydX

Any advice on employment law... IC's vs employees??? Lol


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## Instyle

SydX said:


> Any advice on employment law... IC's vs employees??? Lol


Yes, this is very valid and I encourage the ATO to further look into this. Uber exercise a lot of control over their 'Independent Contractors'

How can we or a driver explore this query further?


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## GCUber

Michael I have contacted my state Workcover department. After much discussion and explanation of the whole Uber invoicing, weekly payments, minimum job acceptance rate (90%), their control of jobs it was determined that I was classified as an employee. There is also guaranteed minimum hourly rates of income if I am logge into the app and accept a certain number of jobs.

As the ATO you are responsible for not only ensuring GST and PAYG compliance but I am also informed by my accountant that you are responsible for ensuring superannuation compliance. Because I am classified as an employee I want to know why UBER do not pay my the SG? I would also like to know why they are not responsible for my Workcover, income tax collection.

I fully understand the ATO GST compliance but believe you are letting UBER off very lightly when you should be ensuring full tax, superannuation and employer compliance.


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## UberFreak

Michael, is it true that the ATO can see deposits into my bank account and from where for compliance purposes?


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## UberPlates

Like I said in reply to your Melbourne entry, I never thought I'd be so happy to hear from the ATO!  Roll on next Wednesday!


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## Ghostwren

Greetings Assistant Commissioner Hardy. Thank you for taking the time to answer our questions.


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## Ghostwren

Historically, why were cab drivers excluded from the $75,000 GST threshold?

Ref: "business or enterprise has a GST turnover (gross income minus GST) of $75 000 or more"
https://www.ato.gov.au/business/gst/registering-for-gst/


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## SydX

To stop immigrants utulising the cash economy... lol


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## camoflage

I'll be here next wednesday !

I understand the GST rules are to be implemented ,who needs to pay it to the ATO ? we drivers dont see or arrange the riders invoice.


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## Instyle

camoflage said:


> I'll be here next wednesday !
> 
> I understand the GST rules are to be implemented ,who needs to pay it to the ATO ? we drivers dont see or arrange the riders invoice.


According to the Uber agreement the transaction is between you the driver and the rider, but in reality we all know this is not true as any rider is a customer of Uber not the individual transportation provider (Uber Driver). Considering Uber make regular bank deposits of money you've earned for the previous week. Uber allows themselves free reign of your funds to adjust payments without consent and without notice according to customer feedback.

I encourage the ATO to look at the validity of this setup! Its not wise for so many people to look the other way while this huge multinational exploits Australian Workers and makes false claims of earning and job creation while it merely distributes wealth and exports a cut (profits) overseas into a tax haven.


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## SydX

Exactly said.... its their customers not the IC'S... they have total control over pretty much everything except shifts... its total farce how they are skirting laws & getting away with it..


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## Sydney Uber

I noticed on Ice cream delivery day, Uber DID try and comply with food handling laws. So perhaps Tax compliance isn't impossible for them. 

At the bottom of the email sent out to all riders it had the warning: "May contain Nuts"!


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## SydX

But should exclude samonela... lol


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## GCUber

Michael will the ATO be requiring UBER to issue the tax invoice like it already does overseas where it complies with relevant local taxes eg. Florida it applies state and federal GST. 

Also will UBER have to send the invoice to the customer or as done have indicated will the drivers need to carry around a receipt booklet and handwrite out a receipt if requested by the customer. So is it a tax invoice or a receipt and what from an ATO point is the difference.

Thanks


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## MichaelATO

Hi Ghostwren, I agree and appreciate you checking that you’re speaking to the ATO especially when it concerns tax and financial advice. If you go to our website ato.gov.au/Business under 'News and updates' you'll find "Live Q&A ride-sourcing and tax 29 July", which details next week's chat and links back to this thread.

Thanks UberX.illegal, SydX, Instyle, GCUber, UberFreak, UberPlates, Ghostwren, Sydney Uber and Camoflage for your questions and comments. I’ve taken them on board and will have the answers ready for our Q&A on Wednesday at 6.30pm AEST. I'll be back first thing Monday to check for new questions.


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## Ghostwren

Thank you Assistant Commissioner, I have had official verification from Adam Johnson, of the ATO.


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## Ghostwren

Most lively discussions are currently on the Brisbane forum:
https://uberpeople.net/threads/ato-live-chat-–-q-a-ride-sourcing-and-tax.28953/


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## Jeffa0

Hi Michael, my question relates to the calculation of GST on a fare.
As Uber obviously transact off-shore, Do I take my GST part off the base fare or additional to the base fare?
Example, $50 fare, do I make that fare $55 inclusive or do I take the 1/11 rule on the $50 and the GST is $4.54?.

This is my only real confusion.. I am also curious if you've had any further interactions with Uber and are they going to be issuing tax invoices by default to customers on behalf of drivers? Or are they still saying they don't have to comply?

I believe in a fair days work and fair tax.. If I have to pay 10% then that's fine. It means I can claim GST on fuel, cleaning etc.. So it's all swings and roundabouts


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## Instyle

Question regarding income sourced through Uber prior Aug 1st 2015, as the ATO have openly went on file saying GST complience would only be sort from Aug 1st and not made retrospective. Would it be accurate to say prior Aug 1st Uber income is GST free income or excempt?

If your currently registered for GST, can I list prior* work as GST free sales with the possibility of a GST credit/refund or would I be obligated to submit 1/11 of all earnings as GST?


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## Instyle

For drivers that don't intend on moving forward with GST registration and wish to leave the activity, would it be safe to work upto midnight 31st July? Bear in mind payments for the prior weeks work would typically be deposited 4-5th Aug after the GST reg cut off.


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## Ghostwren

For GST purchases made in the month of July, if the cost of these items is not covered by July's profits, and the negative balance is bought forward to August, can you then claim the GST in input credits?


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## Instyle

Aug 1st, If UBER made no change to the terms or wording around quoted rates in Queensland. What would the ATO's stance be on the quoted rates to consumers, if it doesn't say GST included would the advertise rates be considered as Ex GST?

Note; other cities (i.e. Syd & Mel) where UberBlack operate the general terms for consumers mention "GST is inclusive where applicable" Brisbane, where UberX is the only variant available does not mention this clause. Reference - https://www.uber.com/cities/brisbane

In deciding taxation issues regarding UBER, how has the ATO sort information on the operations?
* Approached UBER and taken there word.
* Taken UberBlack/UberX trips and reviewed receipt/invoice or website terms.
* Approached current UBER drivers for information regarding actual operations like payments and processes.


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## Brizuberguy

Hello Mr Hardy from the ATO,

I have posted this in the Brisbane section, but also re-posted here:

Is it true that if I acciept a ride post 1/8/2015 and then sell my vehicle say, before the end of 2015 then I must pay 10% of the full vehicle sale price as GST (I use it currently about 50/50 personal/work)? I baught my car 3 years ago, well before Uber was around.
If this is the case, then I may not drive after this date because I intend to sell my car soon. I have earnt about $1,000 from Uber over the past few months (since March), and my car second hand is worth about $40,000. This means If i sell it, I will have to pay you guys $4,000 (4x more than what I earned from Uber so far?). To me this seams a little unfair. I would be $3,000 better off not driving anymore, because I expect to earn around this amount per year (I doubt I will earn more than 4-5k per year). This is a big concern for me because I know I will have to downsize my car soon because I am struggeling financially, my wife is ill. (hence working for Uber in the first place). Thank you for your time.


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## Brizuberguy

Hello Mr Hardy, I have another question which will help me decide should I continue driving past 1/8/2015.

I understand that the GST paid on fuel, servicing, cleaning etc accrew as credits which can offset GST collected and paid on fares. I undertand this is proportioned between business and personal use.
As I indicated above, my driving work/personal is approximatly 50/50 work vs personal. 
I have a normal fulltime job, and if was to break down my driving percentage even further it would be more like this:
15% Uber
35% Work (dayjob)
50% Personal.

Last year I estimate I did a little over 5,000km, about 800km from Uber and about 4,500 from work related driving. I used the cents per km methold and only claimed 5,000 due not keeping adequate log book. I did not plan on driving for Uber until early in the year.

My question: With the GST paid on costs, would I attribute 15% of this towards offseting GST, or 50%?.

I undersand if I continue driving this year I will need to maintain a log book to get the most benefit which I have started already.

Thank you again for your time. I also forgot to mention I did listen to your Webinar and I found it very informative.


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## MichaelATO

Thanks Ghostwren. Jeffa0, we've got your question and will be ready to share with everyone at 6:30pm AEST on Wednesday during the live Q&A. Keep posting your questions here and we'll chat soon.


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## mike375

Hello,
Having Uber drivers collect GST on the gross fare amount seems to complicate invoicing and BAS , as GST will not be 1/11th of the amount we receive.

*Example:*
$220 gross fares = $20 GST and $176 driver payout (inc. GST)
$176 payout - $20 GST = $156 ex GST
$20/156 = 12.8% effective GST rate

Will it be an issue that our BAS do not show GST collected as 1/11th of Sales amounts?
Should drivers 'raise a GST-free tax invoice' for Uber for the 20% fee we pay them?


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## Instyle

mike375 said:


> Hello,
> Having Uber drivers collect GST on the gross fare amount seems to complicate invoicing and BAS , as GST will not be 1/11th of the amount we receive.
> 
> *Example:*
> $220 gross fares = $20 GST and $176 driver payout (inc. GST)
> $176 payout - $20 GST = $156 ex GST
> $20/156 = 12.8% effective GST rate
> 
> Will it be an issue that our BAS do not show GST collected as 1/11th of Sales amounts?
> Should drivers 'raise a GST-free tax invoice' for Uber for the 20% fee we pay them?


Hi mike375 most of your enquiry has already been answered by the ATO with taxation guidance on RIde-sourcing. See link - https://www.ato.gov.au/Business/GST...rough-ride-sourcing-and-your-tax-obligations/

According to the agreement between you and UBER, you charge the customer the full fare and then UBER's commission is charged/invoiced (on your behalf). Check your account to view commissions paid. GST is applicable on the full fare, not just the portion you receive.


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## Instyle

Hi MichaelATO

UBER and consumers have a massive amount of promotional credits circulating the system, traditionally upto $25 free credit. If a consumer has taken a trip that cost $25 but is charged $0 by using promo credit, would a driver be obligated to pay GST for this transaction? i.e. driver would receive $20 payment ($25-20%comm)

Note: Promo codes are widely and commonly used. Drivers don't see what consumers are charged, sometime a passenger will often say I'm using a promo code which is the only way to tell.


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## UberPlates

Hi again MichaelATO - looking forward to tonight's session at 6:30pm AEST, regarding ridesourcing - just confirming which link or webpage I should be on at that time. I messed up first time around... cheers


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## Instyle

UberPlates just in case Michael doesn't answer in time, check the news and updates section of ATO Business https://www.ato.gov.au/Business/ the link is to this main thread in Advice section not each sub-city forum.


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## UberPlates

Instyle said:


> UberPlates just in case Michael doesn't answer in time, check the news and updates section of ATO Business https://www.ato.gov.au/Business/ the link is to this main thread in Advice section not each sub-city forum.


Cool, thanks Instyle ! I'm learning a lot about the Gold Coast just by reading your posts... you've got some good tips.

I get lost on websites... don't even ask how I ever discovered 'Advice' here... it's a modern-day miracle!  seeya...
...


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## UberPlates

So.... this time around, the Q&A session takes place _*purely*_ on UP, and not on the ATO website.. just here, right? Or am I wrong about this? I don't want to muck up twice...


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## Instyle

UberPlates said:


> So.... this time around, the Q&A session takes place _*purely*_ on UP, and not on the ATO website.. just here, right? Or am I wrong about this? I don't want to muck up twice...


Yeah mate, based on the ATO website this Q&A will happen right here in this thread, let embrace the opportunity and keep everything friendly and informative in this thread. Looking forward to this evening, see you all here!


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## mike375

Thanks Instyle


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## SydX

At least our government cares about us... Dont see the same for our US counterparts.... Lol


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## Sydney Uber

MichaelATO how is it that the ATO can come to a simple understanding that UBERX IS an on-demand Taxi Service where a driver has no prior knowledge of the direction and duration of travel, rather than TRUE Rideshare where a driver shares his car traveling on a route and at a time suitable to the driver and a cost per seat set by a driver?

Will this fundamental operational characteristic be adhered to by pimped out Polyanna Politicians who must give the ATO the shits when tasked with applying Tax law without favour and with consistency


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## Sydney Uber

MichaelATO

Enforcement agency raids in other countries of UBER offices have not provided the operational and financial data those agencies sort. In France, it was reported that there was clear evidence that hard drives where erased and data made unobtainable. If met with continued non-compliance by UBER, or ANY Corporation which trades in Australia to make financial data availability to the ATO, what legal action is open to the ATO to secure compliance?


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## MichaelATO

Hi UberPeople members and thank you to all who have joined today's Q&A. I know you have a lot of questions about how tax applies to ride-sourcing and we're here to help.

A big thank you to UberPeople.net for helping us connect with the driver community and also to those who have sent through welcomes and earlier questions. The response has been great.

We have prioritised your earlier questions, so I'll spend a few minutes on each, first giving members the opportunity to take a look at my response.

Now before we get into the nitty-gritty, just a few house rules to keep the discussion on point.

1. Keep questions short and to the point.

2. The responses provided during this forum are of a general the nature and do not constitute ATO's view on the application of legislation to specific situations.

3. Avoid flaming and keep it clean

4. Any questions outside of this forum today should be directed to 
us at *[email protected]*

5. Our moderator Emily from the ATO may comment from time to time to keep things on track.

6. Remember to keep refreshing your screen.

To cover as many of your ride-sourcing and tax questions as possible, we may have to take some later questions on notice. That doesn't mean your questions won't be answered; we will take them away and publish back to the group next Wednesday 5 August 2015.

And lastly, feel free to share this information with any of your ride-sourcing colleagues.


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## MichaelATO

OK, let’s begin!

First of all, I see there was some speculation about whether posts in the forums were really Michael Hardy, Assistant Commissioner with the ATO.

It really is me. We checked with the forum moderator before we signed up an account, as we didn’t want to intrude if it would cause offense.

The post was actually made by an ATO staff member, but the invitation was from me, Michael Hardy. I’m here today, along with some other ATO experts and some ATO people trying to type as fast as they can to answer your questions.

A couple of preliminary explanations.

The ATO does not make law. What we do is that we administer existing law, applied to the facts of new or existing business. The GST law has been in operation since 2000. The ATO uses the same rules of statutory interpretation as used by the Courts. Doing this we found that the existing GST law applies to ride‑sourcing activities.

As noted, the ATO does not make the law. The ATO is not even the primary advisor to the Government on tax law. That is the job of Treasury, although they may ask for our input about how any law change would work in practice.

In trying to administer the tax law, the Commissioner of Taxation has some latitude, such as allowing a sensible start date for people to become registered for GST if they are involved in ride sourcing, and not looking to apply any audit resources before this date, even though the law would allow for it.


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## MichaelATO

camoflage said:


> I'll be here next wednesday !
> 
> I understand the GST rules are to be implemented ,who needs to pay it to the ATO ? we drivers dont see or arrange the riders invoice.


Hi Camoflage.

Drivers need to remit the GST to the ATO. They need to calculate it on the full fare (not the amount paid by Uber to the driver). The gross GST is 1/11th of the full fare. In your BAS you'll also have credits to claim.

You can use information from your facilitator (eg. Uber) to calculate the GST.

GST worksheet for BAS goes online | Australian Taxation Office


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## MichaelATO

Jeffa0 said:


> Hi Michael, my question relates to the calculation of GST on a fare.
> As Uber obviously transact off-shore, Do I take my GST part off the base fare or additional to the base fare?
> Example, $50 fare, do I make that fare $55 inclusive or do I take the 1/11 rule on the $50 and the GST is $4.54?.
> 
> This is my only real confusion.. I am also curious if you've had any further interactions with Uber and are they going to be issuing tax invoices by default to customers on behalf of drivers? Or are they still saying they don't have to comply?
> 
> I believe in a fair days work and fair tax.. If I have to pay 10% then that's fine. It means I can claim GST on fuel, cleaning etc.. So it's all swings and roundabouts


Hi Jeffa0

Thanks for your question. I appreciate your comment about a fair days work and fair tax.

On your question, the GST will always be 1/11th of the fare the customer pays. In your example, the GST will be 1/11th of the $50 charged to your customer.

Our understanding is that ride-sourcing fares are set by facilitators (such as Uber). If this is correct, then you could not change the price from $50 to $55. However, the facilitator may change the price to factor in GST. Whether they do or do not - as a driver, the GST amount will always be 1/11th of the fare (you don't add an extra amount to the fare).

On your other question - you will need to talk to Uber about whether they will issue tax invoices on your behalf. If they do not advise you of their position, we recommend that you prepare on the basis that (come 1 August 2015) you may need to issue tax invoices. The reality is that, as tax invoices are only needed for fares over $82.50, you will probably not need to issue many.

By law the ATO cannot "make" Uber or any other facilitator issue a tax invoice on behalf of a driver as the driver has the legal responsibility to issue a tax invoice if the fare is over $82.50 and the tax invoice is requested by the passenger.


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## MichaelATO

Instyle said:


> Aug 1st, If UBER made no change to the terms or wording around quoted rates in Queensland. What would the ATO's stance be on the quoted rates to consumers, if it doesn't say GST included would the advertise rates be considered as Ex GST?
> 
> Note; other cities (i.e. Syd & Mel) where UberBlack operate the general terms for consumers mention "GST is inclusive where applicable" Brisbane, where UberX is the only variant available does not mention this clause. Reference - https://www.uber.com/cities/brisbane
> 
> In deciding taxation issues regarding UBER, how has the ATO sort information on the operations?
> * Approached UBER and taken there word.
> * Taken UberBlack/UberX trips and reviewed receipt/invoice or website terms.
> * Approached current UBER drivers for information regarding actual operations like payments and processes.


Hi Instyle. I can't really comment on what Uber advise or if it is different for different services or in different states, I can just tell you what the tax law says.

By law, the amount charged to the passenger is GST‑inclusive, even if the passenger is not advised that GST is included. The GST amount will be 1/11th of the fare

In understanding how the existing tax law applies to ride‑sourcing services like Uber, we had discussions with Uber and took information from them and their tax advisors. We have checked this with public sources. We have taken information provided to us by the public, and checked sources to see how reliable it is. We have discussed our understanding and interpretation of the law to the facts with Uber.

Some information from the public has been about their experience of registering and using ride‑sourcing services, including any documents they received. We were sent tax invoices for one Uber service in Australia issued by Uber, for example. It is not always possible to tell if a person that is providing information is a driver for a particular ride‑sourcing service or not.


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## MichaelATO

mike375 said:


> Hello,
> Having Uber drivers collect GST on the gross fare amount seems to complicate invoicing and BAS , as GST will not be 1/11th of the amount we receive.
> 
> *Example:*
> $220 gross fares = $20 GST and $176 driver payout (inc. GST)
> $176 payout - $20 GST = $156 ex GST
> $20/156 = 12.8% effective GST rate
> 
> Will it be an issue that our BAS do not show GST collected as 1/11th of Sales amounts?
> Should drivers 'raise a GST-free tax invoice' for Uber for the 20% fee we pay them?


Hi mike375.

In your BAS, your sales should be equal to the gross fare, not the net amount you receive after the commission is deducted. For that reason, the GST amount on your BAS should be 1/11th of your sales.

I take your point that, because of the netting off process used by the facilitator, you will not be paying 1/11th of what you receive.

Importantly, however, there are two separate transactions. One is the driver's transportation of the passenger for say $55. The second is the facilitator's service for which the facilitator charges the driver a commission of say $11. Although these two amounts are net off by the facilitator who handles all the money, this does not change the fact that the driver is required to pay GST on 1/11th of the $55 for their service.

On your other question - no, drivers do not need to send a GST-free invoice to Uber for the 20% commission.


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## MichaelATO

GCUber said:


> Michael will the ATO be requiring UBER to issue the tax invoice like it already does overseas where it complies with relevant local taxes eg. Florida it applies state and federal GST.
> 
> Also will UBER have to send the invoice to the customer or as done have indicated will the drivers need to carry around a receipt booklet and handwrite out a receipt if requested by the customer. So is it a tax invoice or a receipt and what from an ATO point is the difference.
> 
> Thanks


Hi GCUber, good question.

A tax invoice is only required if the fare is over $82.50 and the passenger requests it from you.

The facilitator can issue a tax invoice on your behalf. However, if this facilitator does not do this, then you will need to issue one.

A tax invoice needs to contain certain information including your Australian Business Number (ABN), the amount of GST payable and an indication of what the customer has paid for (e.g. "transportation from A to B" or "ride-sourcing service"). Ideally, document should also contain the words "tax invoice".

https://www.ato.gov.au/Business/GST/Issuing-tax-invoices

The difference between a tax invoice and a receipt is that you can issue a receipt without some of the above information on it (for example you could omit your ABN) and it will still be a genuine receipt, but it will not be a tax invoice.

You are free to issue an invoice/receipt to a passenger.


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## MichaelATO

This question came from the Brisbane thread.

Question:
Mr Hardy,

The feedback that we see in the forums from many share drivers is that they are happy to pay GST because they can claim back GST input credits, and similarly, happy to pay income tax because they can claim their business costs back. But the misconception among all of them is that they seem to think they will be getting* all *their GST back from GST input tax credits and* all *their business costs back from an income tax return.

What kinds of education programs is the ATO putting in place to make share drivers aware that they only get a fraction of their business costs back when in three months time

a) They measure their GST BAS bill against their GST input credits and find that the credits make up only a tiny fraction of their over all GST outlay

and in 12 months time

b) They come to do their income tax return and realise that their ex GST business costs are in fact only non-taxable (the meaning of tax deductible) therefore it still costs the business whatever the amount they spent, and in tax return on this purchase they will only get (depending on their tax bracket) for example 19c back on every dollar they spent, and they are only getting the tax back that they have already paid through the year via BAS in the first place!?

It's very strange that share drivers think that they will be better off financially because of these small '_concessions'_ they can claim back on all their business costs and we don't see the ATO doing anything to dispel this myth.

Can you please explain to share drivers exactly what financial position they will be in with regard to GST tax input credits and income tax deductions so that they understand that they are not getting back every cent they spend on their businesses?

Answer:

I can see that some people on the forums seem a bit uncertain, but lots of people seem to be understanding perfectly well. When we ran some webinars last week we received online feedback that about 80% of participants understood what they needed to do.

Like with any activity that has some business and some private use, the business proportion is what is taxable or deductable.

There is quite a bit of information on the ATO web site about claiming deductions and apportionment for GST and for income tax.

We're also doing things like these webinars to let people know what they need to do. Our guidance on ride-sourcing (on our website) includes an example.

Because GST is charged to the customer in the price, we know that some small business put this amount aside or in a separate bank account until they complete their BAS.

A quick example. The figures are just provided to make the mathematics easy to understand:

A driver is registered for GST for the whole year and uses his or her car 50% for ride‑sourcing, established by a log book for example.

They make $11,000 in fares for the year. They have expenses of:

· $2,000 commissions (no GST charged)

· $4,400 fuel, car servicing

· $110 in car cleaning.

GST:

· gross GST is $1,000 (1/1th of $11,000)

· input tax credits are $205

(1/11th of fuel, servicing and car cleaning x 50%. No credit for the commission because no GST charged); and

· net GST is $795 (1,000 - 205).

This is probably paid divided up over 4 quarters of the year. Because expenses like servicing probably only happen in one quarter, you might get a refund in that quarter, but pay more net GST in other quarters. Don't forget that you have $9,000 over the year ($11,000 - $2000) in your bank account to pay for these expenses.

Income Tax:

Assessable Income is $10,000 ($11,000 minus GST of $1,000)

Deductions are $2000 in commissions, $52.50 in car cleaning ($110 less $5 input tax credit claimed for GST x 50%) and $2100 in fuel and servicing ($4,400 less the $200 input tax credit component x 50%).

Total deductions of $4,152.50

Taxable Income of $5,847.50 x your tax rate.


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## MichaelATO

UberFreak said:


> Michael, is it true that the ATO can see deposits into my bank account and from where for compliance purposes?


Hi UberFreak.

Yes, the ATO does have powers to collect data from third parties including banks and other financial institutions and are investigating how payments are made to drivers. We are also working with facilitators of ride‑sourcing services in order to reach out to drivers to make sure they know what to do, and we can get information from other sources. We also have members of the public contacting us about ride‑sourcing drivers.


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## Instyle

MichaelATO For questions from other cities, feel free to click +Quote on the question then jump to this thread and then the option Insert Quotes appears near type box, which will give the question the blue box "User said"


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## MichaelATO

Brizuberguy said:


> Hello Mr Hardy, I have another question which will help me decide should I continue driving past 1/8/2015.
> 
> I understand that the GST paid on fuel, servicing, cleaning etc accrew as credits which can offset GST collected and paid on fares. I undertand this is proportioned between business and personal use.
> As I indicated above, my driving work/personal is approximatly 50/50 work vs personal.
> I have a normal fulltime job, and if was to break down my driving percentage even further it would be more like this:
> 15% Uber
> 35% Work (dayjob)
> 50% Personal.
> 
> Last year I estimate I did a little over 5,000km, about 800km from Uber and about 4,500 from work related driving. I used the cents per km methold and only claimed 5,000 due not keeping adequate log book. I did not plan on driving for Uber until early in the year.
> 
> My question: With the GST paid on costs, would I attribute 15% of this towards offseting GST, or 50%?.
> 
> I undersand if I continue driving this year I will need to maintain a log book to get the most benefit which I have started already.
> 
> Thank you again for your time. I also forgot to mention I did listen to your Webinar and I found it very informative.


Hi Brizuberguy.

We did post an example of claiming the business proportion of expenses in another post, but let's see if I can answer your figures.

I assume that your day job is not one which requires you to be registered for GST, but where the expenses are a legitimate work related expense.

For you then, the amount of the GST credits would be 15% of the GST included in your expenses.

You would be able to use the 50% figure for income tax, but you have to be a bit careful because your income tax deduction cannot take into account the GST credits you claimed. For example, if you buy something for $110 including $10 GST, you can claim a $1.50 GST credit (15% of $10). However, your income tax deduction is not 50% of $110. It is 50% of %108.50 (because you can't deduct the GST credit amount).


----------



## MichaelATO

Instyle said:


> MichaelATO For questions from other cities, feel free to click +Quote on the question then jump to this thread and then the option Insert Quotes appears near type box, which will give the question the blue box "User said"


Thanks Instyle for the tip, we'll try to do that for the next question from another thread.


----------



## MichaelATO

GCUber said:


> Michael I have contacted my state Workcover department. After much discussion and explanation of the whole Uber invoicing, weekly payments, minimum job acceptance rate (90%), their control of jobs it was determined that I was classified as an employee. There is also guaranteed minimum hourly rates of income if I am logge into the app and accept a certain number of jobs.
> 
> As the ATO you are responsible for not only ensuring GST and PAYG compliance but I am also informed by my accountant that you are responsible for ensuring superannuation compliance. Because I am classified as an employee I want to know why UBER do not pay my the SG? I would also like to know why they are not responsible for my Workcover, income tax collection.
> 
> I fully understand the ATO GST compliance but believe you are letting UBER off very lightly when you should be ensuring full tax, superannuation and employer compliance.


Hi GCUber for another question.

I agree that there are some factors which point towards an employer-employee relationship. However, on balance, we consider ride‑sourcing drivers are not employees (based on the arrangements we are aware of).

Drivers provide their own vehicles and choose their own hours of work, which are not things normally associated with an employer-employee relationship.

We looked at the facts carefully and we used the rules of legal interpretation as used by the Courts.

As for Uber's tax position, I can't discuss that here but the ATO does have a role in making sure that every taxpayer understands the tax law and follows it.


----------



## camoflage

Hello mr Hardy could advise on purchasing a vehicle for use exclusively for ride sharing as an example a vehicle worth $19,990.00 and what is claimable
Camoflage


----------



## MichaelATO

Instyle said:


> Question regarding income sourced through Uber prior Aug 1st 2015, as the ATO have openly went on file saying GST complience would only be sort from Aug 1st and not made retrospective. Would it be accurate to say prior Aug 1st Uber income is GST free income or excempt?
> 
> If your currently registered for GST, can I list prior* work as GST free sales with the possibility of a GST credit/refund or would I be obligated to submit 1/11 of all earnings as GST?


Hi Instyle. As you note, the ATO have said we would not be applying compliance resources to check GST compliance before 1 August 2015.

Ride-sourcing income derived prior to 1 August is not 'GST-free' as such.The GST-free label on the BAS is reserved for things like basic food, medical services, child care etc. that are 'GST-free' in a legal sense.

If you are currently registered for GST, you have two options prior to 1 August:

Option 1 - Account for GST and claim GST credits (and report all amounts in your BAS)

Option 2 - Do not account for GST and do not claim credits (and report no amounts relating to ride-sourcing in your BAS)

You cannot do a mixture of both - i.e. you cannot claim GST credits, but treat your services as not subject to GST so as to get a GST refund.

For income tax purposes, your 2014/15 income tax return is due to be lodged by 31 October 2015 unless you have a tax agent. You should include your ride‑sourcing income, and any relevant deductions, up to 30 June 2015 in that tax return.

If I have misunderstood the first part of your question and you are asking about how you calculate and report for income tax prior to 1 August (if you have not accounted for GST), please let me know.


----------



## MichaelATO

Instyle said:


> For drivers that don't intend on moving forward with GST registration and wish to leave the activity, would it be safe to work upto midnight 31st July? Bear in mind payments for the prior weeks work would typically be deposited 4-5th Aug after the GST reg cut off.


Hi Instyle. Yes, that's fine you will not have any GST obligations (but please see my post about not claiming GST credits in response to your other question). Please also bear in mind that you will still need to report income earned either last year or this year in the relevant tax return, You can also claim any deductions that you are entitled to for your the expenses.


----------



## MichaelATO

Ghostwren said:


> For GST purchases made in the month of July, if the cost of these items is not covered by July's profits, and the negative balance is bought forward to August, can you then claim the GST in input credits?


Hi Ghostwren. If you were registered for GST in July and you want to claim input tax credits for July then you will need to include the GST for July as well. I expect that most drivers will be quarterly BAS lodgers, so this would all be included in the BAS that is due in October, covering July, August and September activity.

If in October, your input tax credits are more than your gross GST, you will get a refund after you lodge your BAS.

When people lodge their first BAS and claim a refund it often triggers checks in the ATO risk systems. It's not to say anything is wrong but just be really sure that you calculated any input tax credits properly, including that you only claimed the business portion.

If you do not register for GST until 1 August, you cannot claim GST credits for purchases you make prior to 1 August.


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## Ghostwren

check your email sports fans: uber update re GST!


----------



## MichaelATO

camoflage said:


> Hello mr Hardy could advise on purchasing a vehicle for use exclusively for ride sharing as an example a vehicle worth $19,990.00 and what is claimable
> Camoflage


Hi Camoflage, glad you're here with us tonight.

If you're in business and the car is under $20,000 and it's a 100% business use and has been bought after budget night, you can claim the instant asset write-off.

I'll try to put a link with more info on the ATO website tomorrow.


----------



## Instyle

MichaelATO said:


> Hi Instyle. Yes, that's fine you will not have any GST obligations (but please see my post about not claiming GST credits in response to your other question). Please also bear in mind that you will still need to report income earned either last year or this year in the relevant tax return, You can also claim any deductions that you are entitled to for your the expenses.


Thanks Michael, of course most of my Questions were for the benefit or Ride-Sourcing drivers and not particular to my circumstances.


----------



## Instyle

Ghostwren said:


> check your email sports fans: uber update re GST!


LOL it's a pay cut for drivers!


----------



## MichaelATO

Brizuberguy said:


> Hello Mr Hardy from the ATO,
> 
> I have posted this in the Brisbane section, but also re-posted here:
> 
> Is it true that if I acciept a ride post 1/8/2015 and then sell my vehicle say, before the end of 2015 then I must pay 10% of the full vehicle sale price as GST (I use it currently about 50/50 personal/work)? I baught my car 3 years ago, well before Uber was around.
> If this is the case, then I may not drive after this date because I intend to sell my car soon. I have earnt about $1,000 from Uber over the past few months (since March), and my car second hand is worth about $40,000. This means If i sell it, I will have to pay you guys $4,000 (4x more than what I earned from Uber so far?). To me this seams a little unfair. I would be $3,000 better off not driving anymore, because I expect to earn around this amount per year (I doubt I will earn more than 4-5k per year). This is a big concern for me because I know I will have to downsize my car soon because I am struggeling financially, my wife is ill. (hence working for Uber in the first place). Thank you for your time.


Hi Brizuberguy.

Yes, it is true that, if you are registered for GST at the time you sell the car, you will need to pay GST based on the full sale price.

If you stop ride-sourcing before the sale and you are not registered (or required to be registered) for GST at the time you sell the car, you do not have to pay any GST on the sale.


----------



## MichaelATO

Instyle said:


> Thanks Michael, of course most of my Questions were for the benefit or Ride-Sourcing drivers and not particular to my circumstances.


No problem Instyle, feel free to share these answers with whoever needs them.


----------



## UberPlates

Don't know if this has been covered, but my ride sourcing facilitator offers $5 payments to drivers whenever they successfully win a first-time rider to the system. We receive the $5 amounts amongst our other payments...
I know it's trivial, but they are still payments, that sometimes come long after we ever hand out the promo coupons. So, are these $5 payments exempt from the GST, or a part of it?
The answer will affect drivers who give away driving, but then subsequently receive payments way down the track - payments that the ATO can see.
Not sure if this has been covered... Thanks


----------



## camoflage

Thankyou Michael in my case the car was bought 2 weeks ago and is exclusively used for ride share and I am an abn holder although not yet registered for gst , that will be tomorrow's job 
Camoflage


----------



## Ghostwren

MichaelATO said:


> you do not have to pay any GST on the sale


so you wont need to pay proportionality the business% use of the vehicle post GST registration?


----------



## MichaelATO

Ghostwren said:


> Historically, why were cab drivers excluded from the $75,000 GST threshold?
> 
> Ref: "business or enterprise has a GST turnover (gross income minus GST) of $75 000 or more"
> https://www.ato.gov.au/business/gst/registering-for-gst/


Hi Ghostwren. The exclusion was applied from the very beginning of GST system. There are several reasons why it may be undesirable to have some taxi drivers registered and others not. For one thing, there would be widespread confusion for the public, drivers and owners if some taxis had to charge GST and others did not.

It is a pragmatic decision that has been in the law since 2000.


----------



## MichaelATO

Instyle said:


> Hi MichaelATO
> 
> UBER and consumers have a massive amount of promotional credits circulating the system, traditionally upto $25 free credit. If a consumer has taken a trip that cost $25 but is charged $0 by using promo credit, would a driver be obligated to pay GST for this transaction? i.e. driver would receive $20 payment ($25-20%comm)
> 
> Note: Promo codes are widely and commonly used. Drivers don't see what consumers are charged, sometime a passenger will often say I'm using a promo code which is the only way to tell.


Hi Instyle

The driver will be liable to pay GST on the full amount of the fare ($25 in your example).

Essentially, Uber is paying the $25 fare (rather than the passenger), but this makes no difference to the driver's GST liability.


----------



## MichaelATO

UberPlates said:


> Don't know if this has been covered, but my ride sourcing facilitator offers $5 payments to drivers whenever they successfully win a first-time rider to the system. We receive the $5 amounts amongst our other payments...
> I know it's trivial, but they are still payments, that sometimes come long after we ever hand out the promo coupons. So, are these $5 payments exempt from the GST, or a part of it?
> The answer will affect drivers who give away driving, but then subsequently receive payments way down the track - payments that the ATO can see.
> Not sure if this has been covered... Thanks


Thanks for the question UberPlates

I'll need to have a bit of a think about this question and might need to get a bit more information. If I do, I'll post back here. If not I'll post the answer here.


----------



## Ghostwren

UberPlates said:


> Don't know if this has been covered, but my ride sourcing facilitator offers $5 payments to drivers whenever they successfully win a first-time rider to the system. We receive the $5 amounts amongst our other payments...
> I know it's trivial, but they are still payments, that sometimes come long after we ever hand out the promo coupons. So, are these $5 payments exempt from the GST, or a part of it?
> The answer will affect drivers who give away driving, but then subsequently receive payments way down the track - payments that the ATO can see.
> Not sure if this has been covered... Thanks


not until now


----------



## MichaelATO

Ghostwren said:


> so you wont need to pay proportionality the business% use of the vehicle post GST registration?


Hi Ghostwren

You only have to charge GST on the sale of the car if you are registered for GST when you sell the car. In Brizuberguy's example, I'm assuming legitimate ceasing of the business and so the answer is correct. There is no proportional GST issue. However, if we saw this being manipulated we could investigate.


----------



## Sydney Uber

Thanks MichaelATO

Can you help point out to the forum here the true percentages that are taken out of the gross fare for both GST and UBER commission. Someone at the ATO with a calculator can dispel once and for all the misinformation about commissions

A gross fare of $110.00 is completed, as you have stated earlier $10.00 is GST that is to be retained and submitted to the ATO.

If UBER then calculates it's 25% commission on $110.00 where in reality a driver only has $100.00 nett, what is UBER's commission percentage?


----------



## MichaelATO

Hi all

I need to get up to date with my tech skills, and so to those who posted in the Brisbane and other city threads, I will use the tip I was given and respond to your questions tomorrow so that they appear in this thread but are quoted correctly. Hope that is okay.


----------



## Brizuberguy

MichaelATO said:


> Hi Brizuberguy.
> 
> Yes, it is true that, if you are registered for GST at the time you sell the car, you will need to pay GST based on the full sale price.
> 
> If you stop ride-sourcing before the sale and you are not registered (or required to be registered) for GST at the time you sell the car, you do not have to pay any GST on the sale.


Hi Michael, thank you very much for answering this for me, this piece of information has just saved me a big tax liability.

As feedback, I think this is a very important thing to be aware of. This is enough to be a deal breaker for me (to continue driving). I know another driver that is in a similar situation.

My final question, I have not driven since the first week of July, last payment from Uber was on like the 13th of this Month. I do not intend to work anymore past 1/8/2015. 
Q: For next financial year, i have earned about $200 FYTD for Uber. Am i OK to just put this in my tax return like last year? I do not intend to claim GST credits etc as you explained before.

Thank you again Michael.


----------



## MichaelATO

Brizuberguy said:


> Hi Michael, thank you very much for answering this for me, this piece of information has just saved me a big tax liability.
> 
> As feedback, I think this is a very important thing to be aware of. This is enough to be a deal breaker for me (to continue driving). I know another driver that is in a similar situation.
> 
> My final question, I have not driven since the first week of July, last payment from Uber was on like the 13th of this Month. I do not intend to work anymore past 1/8/2015.
> Q: For next financial year, i have earned about $200 FYTD for Uber. Am i OK to just put this in my tax return like last year? I do not intend to claim GST credits etc as you explained before.
> 
> Thank you again Michael.


Hi Brizuberguy

How about I don't try to give you personal tax advice here and instead you send an email to me at [email protected], and I'll get you some good advice.


----------



## Instyle

UBER have a large degree of control over driver activity, they operate at such low unsustainable rates but offer "Incentives" to be logged on at certain timeframes and accepting 90% of all incoming requests, as they like the comfort of employee-like control with only contractor conditions. Making it barely profitable unless you drive during incentive times and accept all requests.

Incentives payments are usually a minimum hourly top up, for example $30p/hr. If a driver only receives one request in that hour and grosses $10, UBER would top up to the hourly amount. Drivers would see an additional $20 in other payments not directly related to actually transporting anyone.

Would these other payments, similar to the $5 referral credit in (other payments) be subject to payable GST?


----------



## MichaelATO

Hi all

A big thank you to everyone for your active participation in today's discussion. I hope we've clarified some of your questions about how tax applies to you as ride-sourcing drivers. Any questions we didn't have time to get to will be posted in this thread in a question answer format within the week, this includes those in other city forums.

If you have further questions, email us at [email protected].

Thanks again for your involvement today.


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## camoflage

Thankyou Mr Hardy


----------



## Instyle

Top effort MichaelATO and other ATO associates that facilitated the Q&A tonight, a big thank you and look forward to the updates on any unanswered questions in the days to come.


----------



## SydX

Here Here


----------



## Instyle

MichaelATO said:


> Hi Instyle. As you note, the ATO have said we would not be applying compliance resources to check GST compliance before 1 August 2015.
> 
> Ride-sourcing income derived prior to 1 August is not 'GST-free' as such.The GST-free label on the BAS is reserved for things like basic food, medical services, child care etc. that are 'GST-free' in a legal sense.
> 
> If you are currently registered for GST, you have two options prior to 1 August:
> 
> Option 1 - Account for GST and claim GST credits (and report all amounts in your BAS)
> 
> Option 2 - Do not account for GST and do not claim credits (and report no amounts relating to ride-sourcing in your BAS)
> 
> You cannot do a mixture of both - i.e. you cannot claim GST credits, but treat your services as not subject to GST so as to get a GST refund.
> 
> For income tax purposes, your 2014/15 income tax return is due to be lodged by 31 October 2015 unless you have a tax agent. You should include your ride‑sourcing income, and any relevant deductions, up to 30 June 2015 in that tax return.
> 
> If I have misunderstood the first part of your question and you are asking about how you calculate and report for income tax prior to 1 August (if you have not accounted for GST), please let me know.


g00r couldn't quote in private message, but encourage you to read the above in relation to openly admitting receiving GST refunds for existing drivers.


----------



## Ghostwren

Instyle said:


> LOL it's a pay cut for drivers!


they do seem to list all the things they are doing to support their 'lil ol' partners and an increase is not amount them.


----------



## g00r

Instyle said:


> g00r couldn't quote in private message, but encourage you to read the above in relation to openly admitting receiving GST refunds for existing drivers.


Thanks for the heads up Instyle. Although this was checked with the ATO at the beginning of my Ubering days (with notes about which ATO agent provided the advice), I will re-confirm this once again for myself, and the advice provided to others.


----------



## Nellcote

Uber's email to Melbourne partners last night sadly failed to address the important issue that fares need to rise to accomodate the GST. When they dropped the fares by 15% recently, I was hoping this was in preparation for raising them by 10% for GST. It looks like we are being shafted again.

*Imagine the public outcry if all drivers logged-off at midnight on Friday and nobody could get an Uber! That would get more press coverage than cheap ice-cream.

Thoughts????*


----------



## MichaelATO

Hi everyone, thanks for your patience. I'll now post answers to all the questions we ran out of time to address on Wednesday night, including questions received from the Brisbane thread.


----------



## MichaelATO

Ghostwren said:


> The formula for GST and the disposal of capital assets is confusing. Can it be simplified for share drivers? Wouldn't an exemption from GST on the resale (disposal) of private cars be a better solution?
> 
> Formula = 1/11 x Price x (1 - Adjusted GST credit / Full GST credit)
> 
> https://www.ato.gov.au/Business/GST...tions/GST-and-the-disposal-of-capital-assets/'


Hi Ghostwren,

I appreciate the formula may look complicated on first glance.
I'll explain how it works by using an example:

Driver registers for GST on 1 August 2015. 
Driver buys car on 1 November 2015 for $22,000 (including $2,000 GST). 
Driver uses car 25% for ride‑sourcing and 75% for private purposes. 
In their BAS for Oct-Dec 2015, the driver claims a GST credit of $500 ($2000*25%). 
Driver sells car on 29 June 2016 (while still registered for GST) for $11,000 including $1,000 GST.

In this example, the formula works in the following way:
The first part of the formula (i.e. "1/11* price") is simply the amount of GST on the driver's sale of the car ($1,000).

In the second part of the formula, the adjusted GST credit is $500 (being the credit the driver claimed for their purchase of the car) and the full GST credit is $2,000 (being the full credit the driver could have claimed if it used the car wholly for business purposes).

1 - $500/$2000 = 1-0.25 = 0.75.

Therefore the driver, when selling the car, can claim 
1000*0.75= $750

The reason they can claim 75% (and not 100%) of the GST is because they received a 25% credit for their purchase of the car.

As a ride-sourcing driver, you will not often have to dispose of a capital asset. Generally, it will only happen if you sell your car. If you are not sure of what to do when this occurs, you can contact us. We are here to help.


----------



## MichaelATO

Ghostwren said:


> The annual $75,000 threshold for most Australian enterprise is an amount that very few, I'd argue if any share drivers will be able to reach solely through a ride sourcing enterprise. This raises several questions.
> 
> 1. Why is share driving targeted for GST when there are so many vast differences between taxi services and ride share services, primarily of these, drivers provide a service to the app provider, not the public? We can prove this. We have the invoices and payments in our bank accounts from one and only one source, the app provider. The app provider sets all the rules for drivers such as who can drive, how much they are remunerated, how local (Australian) tax compliance issues are handled, and when a driver must cease, this list could go on. This is important in the context of how Australian contractors are protected from potentially predatory activity of overseas app providers. The distinction here is that cab drivers have a choice of who they contract their services too and are (often) contracted by Australian Taxi Fleets. Cab drivers have a union and negotiation power with their bosses. That's one very big difference.
> 
> The practical differences of the ride share experience: riders get my phone number, they cannot hail a share ride in the street, share drivers don't have access to cab ranks and pay more parking fees or use more petrol, the customer feedback experience is completely different to cabs, the rating system is completely different to cabs. I could go on.
> 
> So, the question is why have share driving services been labeled as taxi services when the fit is so very wrong?


Since the start of GST anyone providing what are called 'taxi travel' services under the GST law has been required to be registered for GST from the first supply. There has never been a $75,000 threshold for this type of supply.

The practical reason is that it would be chaotic for drivers and passengers if there were different fares depending upon if the driver or the passenger were registered for GST. A practical decision, learnt from overseas experience is that there is no threshold for this service and this was put into the law from the start.

The ride sourcing services provided under the Uber model fit within the legal definition of taxi travel for GST purposes, so this law applies to ride sourcing services.

The ATO has tried to use the neutral term 'ride‑sourcing' to describe the services offered by Uber drivers. We are saying that both ride‑sourcing services and conventional taxi services fit into the GST legal definition of 'taxi travel' services.


----------



## MichaelATO

Ghostwren said:


> The annual $75,000 threshold for most Australian enterprise is an amount that very few, I'd argue if any share drivers will be able to reach solely through a ride sourcing enterprise.
> 
> This in itself appears to make the GST ruling for share ride services abhorrent.
> 
> $75,000 divided by 52 weeks in a year divided by 7 days a week (that's everyday of the year) equals over $206 a day....I'd guess that on average a share driver would need to work at best between 10-14 hours a day to earn that kind of money. Everyday, for a year without a single day off.
> 
> It just does not seem practically possible.
> 
> So why are share drivers being labeled as a taxi service when the service provider is based overseas, the drivers have practically no chance of earning $75,000 and share drive services are so different to taxi services? Are share drivers being used as a scapegoat and a unfair tax revenue source to appease other interest groups that are harder to negotiate with?


This question has been asked a number of different ways.

Since the start of GST anyone providing what are called 'taxi travel' services under the GST law has been required to be registered for GST from the first supply. There has never been a $75,000 threshold for this type of supply.

The practical reason is that it would be chaotic for drivers and passengers if there were different fares depending upon if the driver or the passenger were registered for GST. A practical decision, learnt from overseas experience is that there is no threshold for this service and this was put into the law from the start.

The ride sourcing services provided under the Uber model fit within the legal definition of taxi travel for GST purposes, so this law applies to ride sourcing services.


----------



## MichaelATO

Ghostwren said:


> Which legislators would be the most practical to approach to discuss matters concerning the issues of share driver independent contractors? Independent contractor share drivers to overseas app providers are a vulnerable Australian working community entering into unknown territory. Surely some protections can be put in place by law makers to help close loopholes and bring share drivers on an even playing field with the same or similar but appropriate protections as the rest of the Australian community?


Any changes to GST laws need to be passed by Federal Parliament.

If you believe particular tax laws should be changed, you have the option of writing to a member of Federal Parliament (including your local member or a particular minister) to suggest changes. You may write individually or collectively as part of a broader stakeholder group (e.g. ride-sourcing drivers).


----------



## MichaelATO

Ghostwren said:


> If I bought a second hand car on the private market prior to starting share driving, paid no GST on that purchase, (I mean if I already owned a secondhand car) then used it for one or more share drives after August 1, will I need to pay the ATO 10% GST on 100% of the car resale value at disposal if I intended to keep driving with a replacement car, therefore remained registered for GST?
> 
> Is it a better idea in this scenario to deregister from GST, ABN etc (effectively shut down operations), sell the car (therefore only need to pay GST on the percentage used for business) then re-register for GST, ABN, facilitator etc and buy a replacement car?


Yes, you will have to pay 10% on the resale value at disposal if, at the time you sell the car, you are still registered for GST.

As an example:
A driver purchases a second‑hand car on the private market for $11,000 in July 2015 before it is registered for GST.
On 1 August 2015, the driver registers for GST.
The driver uses the car for ride‑sourcing.
In 2017, while still registered for GST, the driver sells the car for $5,500 ($5000 + $500 GST = $5500).

In the example, the driver would be required to report the $500 GST on the sale of the car on their BAS.
They would not be entitled to a GST credit for their purchase of the car because it was a private sale and the driver was not registered. The special rule that applies on disposal of assets (which I discussed in an earlier post) will not apply.

Even if the driver had bought the car from a registered business, like a dealer, the same outcome as above will arise. As the driver was not registered for GST when he or she bought the car he or she will not be able to claim a GST credit.

If the driver has stopped providing ride-sourcing services and cancelled their GST registration prior to selling the car they will not need to charge GST as they are no longer registered.


----------



## MichaelATO

Ghostwren said:


> Asst. Commissioner,
> 
> Is there any time limit imposed by law that will prevent you applying the law more favorably for share drivers, assuming are satisfied that the ruling is incorrect and disadvantages share drivers? If so when does this time limit expire?
> 
> Ref: https://www.ato.gov.au/business/gst...dustry---issues-register/?page=1#Introduction, 4th paragraph.


I think this question is asking that if a Court overturns the ATO view of the law, or the Parliament amends the law retrospectively, how far back can drivers go if they wish to seek refunds of GST?

There is a four-year time limit in the GST law. If, hypothetically, a court was to overturn the ATO's decision at some stage in the next four years, drivers would be in time to lodge claims for refunds of GST they overpaid from 1 August 2015.


----------



## MichaelATO

Something's fishy said:


> Ghostwren...
> 
> UBER is a hypocritical foreign corporation that runs an illegal taxi service, hiding behind the "share-economy" in order to avoid tax and GST to garner an unfair advantage over Australian businesses...
> 
> So stop trying to monopolise the commissioners time with UBER's pathetic demands for more tax and GST avoidance.
> 
> @ Assistant Commissioner,
> 
> What i wanna know is will UBER be paying it's fair share of tax and will it be paying GST on the 20% commission it receives or will the UberX drivers be liable for the entire amount of GST?
> 
> In fact Assistant Commissioner, as an illegally acting corporation, shouldn't the ATO be confiscating UBER's accounts and assets for running an illegal taxi service?


Hi Something's fishy. I can't discuss Uber's own tax affairs here, but the ATO does try to make sure that every taxpayer understands what they need to do under the tax law and that they comply with it.


----------



## MichaelATO

Ghostwren said:


> Mr Hardy, it was reported in the Australian Business Review today that you said "the ATO had not modelled how much, if any, additional revenue would be generated by the [GST] change." But Mr Hardy, it's going to make one very big difference to the back pocket of the little guy, the share driver.
> 
> If you cannot be confident that the cost of processing, scrutinizing, policing and auditing an ever increasing amount BAS bearing individually ever decreasing GST tax revenues as more drivers are recruited and compete for their slice of the pie in a limited market, how is the ATO delivering value to the Australian Taxpayer? Could this ruling be running at a cost to the Australian Taxpayer?
> 
> Evidence of how the number of share drivers on the road could increase if the patterns here follow those in the US, which they likely will as they follow the same business model:
> View attachment 10339
> 
> ref: http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/22/now-we-know-many-drivers-uber-has-and-how-much-money-theyre-making/
> 
> View attachment 10416


Hi Ghostwren. The ATO and Treasury normally only do modelling on tax when there is a new tax introduced or changed, including stopping a tax.

For ride‑sourcing, we just have the existing law being applied to an emerging activity.

Any business needs to pay tax under the law and successful business models factor this into their pricing so they can contribute their fair share of tax under the law.

In relation to the "slice of the pie" if the pie is "limited" then extra drivers just mean thinner slices, regardless of tax. If the pie is growing, then maybe each driver still gets a slice as big as they want. In either case the tax law applies and it is likely that the broader community would like to think that ride‑sourcing drivers are contributing their share of tax under the law.


----------



## MichaelATO

Ghostwren said:


> Quoting again from the same Australian Business Review article:
> 
> "Mr Hardy said the ATO's decision was not intended to have any impact on the business models of "facilitators" - ATO's word for Uber and its competitors.
> 
> "We're just trying to provide a level playing field," he said.
> 
> "We're trying to be pretty even-handed about the operation, both for the drivers and the facilitators too."
> 
> Mr Hardy, how is it "even-handed" if the "facilitator" is as you say unaffected by the tax and the share drivers bear the burden of collecting 100% of the GST out of an 80% share? Cab drivers only need pay GST on their share of their cut but there is nothing in place to protect share drivers from having to provide the 100% of the GST from their own incomes. Is it not a cop out to say that this is just a matter between share drivers and the facilitator when it is the ATO that has made this determination in view of the unavoidable fact that an OS facilitator will take a cut?


It's a good question.

I can't discuss Uber's own tax affairs here, but the ATO does try to make sure that every taxpayer understands what they need to do under the tax law and that they comply with it.


----------



## Ghostwren

Mr Hardy I think share drivers would suggest that it is a new tax. Could this ruling be running at a cost to the Australian Taxpayer?


----------



## MichaelATO

Ghostwren said:


> To illustrate this point and how the GST is being unfairly applied to share drivers when compared to cab drivers:
> 
> *Fare was $55
> GST was $5
> Cab Driver gets 50%* of the fare, collects 50% of the GST, $2.50
> Cab Driver can claim input credits of $2.50 for $27.50 outlay
> Cab Driver has no GST burden
> 
> OR
> 
> Fare was exactly the same: $55
> Share Driver collects 100% of the GST $5 regardless of their % of the fare
> Share Driver can claim input credits of $2.50 for exactly the same $27.50 outlay
> 
> Share Driver has a remaining $2.50 GST burden but Cab Driver under the same circumstances has none.*
> 
> *the actual percentage a cab driver makes is irrelevant in this equation because it still demonstrates the point no matter what percentage split you apply.
> 
> Mr Hardy,
> 
> Please examine the above equation. Because cab drivers who work for companies split their GST bill between the driver and the company (or owner), whereas share drivers as of August 1 will be required to provide 100% of the GST regardless of any split with a facilitator, share drivers are being unfairly treated compared to cab drivers as their GST bills are higher and their GST input tax credits will be a relatively lower proportion of their GST bill compared to cabbies.
> 
> This creates a slanted playing field against share drivers and effectively lets the source of all this fuss, "Overseas Facilitators" off without any comparable tax burden. Now when you compare OS Facilitators to taxi companies who do pay GST, this ruling when they examine it closely will not work well for them either, the ATO is over taxing the wrong party and there is one party only that stands to be the runaway winner out of this ruling: the OS Facilitator.
> 
> The question is Mr Hardy, in light of this, will the ATO change it's classification of share driving services as taxi services as it is clearly unfair for share drivers, and wait until legislators create fairer and more appropriate regulations, then apply those instead? In that waiting period, by all means ask share drivers to get an ABN, keep business records and pay income tax. But the GST, not the GST in and of itself but the way it's being applied to share drivers is just not fair under the current ruling.


Hi Ghostwren. It's good to see you providing some example. I assume you are saying that the cab driver gets 50% of the fare under a bailment arrangement or something similar with the owner of the taxi cab.

I think it would be more accurate to say for a taxi driver:
Fare was $55.
GST was $5 (payable by driver).
Driver pays $27.50 for bailment (using you figures) and can claim a $2.50 GST credit
Driver pays net GST of $2.50 ($5 GST - $2.50 GST credit) to ATO out of the $27.50 it receives.

Driver claims $25.00 ($27.50 - $2.50 GST credit) as an income tax deduction in an income tax return at the end of the year.

For an Uber driver:
Fare was $55.
GST was $5.
Driver pays $11 for commission (my figure for this example (20% of $55))
Driver pays $5 in GST to ATO out of the $44 it receives less any input tax credits for example on fuel.

Driver claims the full $11 commission as a business expense in an income tax return at the end of the year.

The ATO is applying the law equally, it's just that under one model there can be a bailment expense and under another model there is an offshore commission expense.


----------



## Ghostwren

MichaelATO said:


> Hi Ghostwren. It's good to see you providing some example. I assume you are saying that the cab driver gets 50% of the fare under a bailment arrangement or something similar with the owner of the taxi cab.
> 
> I think it would be more accurate to say for a taxi driver:
> Fare was $55.
> GST was $5 (payable by driver).
> Driver pays $27.50 for bailment (using you figures) and can claim a $2.50 GST credit
> Driver pays net GST of $2.50 ($5 GST - $2.50 GST credit) to ATO out of the $27.50 it receives.
> 
> Driver claims $25.00 ($27.50 - $2.50 GST credit) as an income tax deduction in an income tax return at the end of the year.
> 
> For an Uber driver:
> Fare was $55.
> GST was $5.
> Driver pays $11 for commission (my figure for this example (20% of $55))
> Driver pays $5 in GST to ATO out of the $44 it receives less any input tax credits for example on fuel.
> 
> Driver claims the full $11 commission as a business expense in an income tax return at the end of the year.
> 
> The ATO is applying the law equally, it's just that under one model there can be a bailment expense and under another model there is an offshore commission expense.


Sorry, Asst Commissioner but that assumption is not really accurate because we don't know what the taxi/bailment arrangement is. The equation simply compares business expenses regardless of what those expenses are.

The point I'd like the answer for is:

Proportionately, the input credits of share driver will still make up a smaller part of their GST bill because they don't split the GST with the OS Facilitator, is this not correct?


----------



## MichaelATO

camoflage said:


> Mr Hardy , I asked Uber about their position on the GST this morning in person at the brisbane office , and was told there wasn't a firm answer on the gst and how they were going to implement it . Should they have a plan in place already ? is there any reason for them to still be questioning the ruling ?


Hi camouflage,

I can't really speak for what Uber should do or are, or are not, doing in relation to the tax position of the drivers.

Legally, the drivers are responsible for remitting GST on the taxi travel services they supply, so we are trying to make sure all drivers understand what they need to do.

If drivers do not have an ABN they can easily get one and register for GST at the same time on www.abr.gov.au


----------



## MichaelATO

ubermelb said:


> I honestly cannot see any other solution but for the ATO to extend the deadline by which drivers have to register for GST. It seems that the ATO have haphazardly rushed into making a ruling and setting a deadline that was unrealistic and impractical. To be honest, a January 1 2016 deadline would be more realistic allowing time for proper consultation between drivers and the ATO as well as Facilitators and the ATO. From all accounts the ATO certainly had time to consult at length with the ATIA but are now scrambling to inform drivers of their obligations through an "online information blitz" in the space of a month or so.
> 
> My question to Mr Hardy is why has there been such a short time for drivers to become compliant with a new ruling? Is this time period consistent with other rulings made by the ATO and if not, why not?


Hi ubermelb,

The Commissioner of Taxation wrote to _The Australian_ newspaper to give them the facts about the consultation on this issue.

The ATO started consulting first with Uber in September 2014, so it has been a pretty considered process by the ATO. The ATO only started to cross‑check facts with the taxi industry and others early this year before we put out our interpretation on 20 May.

We gave Uber, the taxi industry and others advance notice of what we were saying as we didn't want them surprised by the media asking them to comment on a decision they had not seen.

Usually people are expected to follow ATO rulings and advice as soon as they are published or at the first opportunity (eg the next sale, the next contract etc).

In this case the ATO has allowed drivers about 10 weeks, since 20 May, to get registered for GST.

Don't forget that the law has been operative since 2000.


----------



## MichaelATO

Sydney Uber said:


> MichaelATO how is it that the ATO can come to a simple understanding that UBERX IS an on-demand Taxi Service where a driver has no prior knowledge of the direction and duration of travel, rather than TRUE Rideshare where a driver shares his car traveling on a route and at a time suitable to the driver and a cost per seat set by a driver?
> 
> Will this fundamental operational characteristic be adhered to by pimped out Polyanna Politicians who must give the ATO the shits when tasked with applying Tax law without favour and with consistency


Hi SydneyUber

The ATO considers that ride-sourcing drivers are providing 'taxi travel' services because they 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.

The ATO does try to make sure that every taxpayer understands what they need to do under the tax law and that they comply with it.


----------



## MichaelATO

Sydney Uber said:


> MichaelATO
> 
> Enforcement agency raids in other countries of UBER offices have not provided the operational and financial data those agencies sort. In France, it was reported that there was clear evidence that hard drives where erased and data made unobtainable. If met with continued non-compliance by UBER, or ANY Corporation which trades in Australia to make financial data availability to the ATO, what legal action is open to the ATO to secure compliance?


In an earlier post, I mentioned that the ATO obtains information from a range of sources, and does not rely on one source only.

Our first priority is to work with people and encourage voluntary compliance before we go down the path of using our legal powers.. We try to make it easy for people to comply and hard for them not to comply.


----------



## MichaelATO

camoflage said:


> Hello mr Hardy could advise on purchasing a vehicle for use exclusively for ride sharing as an example a vehicle worth $19,990.00 and what is claimable
> Camoflage


Hi Camoflage, thanks for your question.

If you're in business and the car is under $20,000 and it's a 100% business use and has been bought after budget night, you can claim the instant asset write-off. Here is a link to more information on expanding accelerated depreciation - https://www.ato.gov.au/general/new-...usiness---expanding-accelerated-depreciation/


----------



## MichaelATO

Sydney Uber said:


> Thanks MichaelATO
> 
> Can you help point out to the forum here the true percentages that are taken out of the gross fare for both GST and UBER commission. Someone at the ATO with a calculator can dispel once and for all the misinformation about commissions
> 
> A gross fare of $110.00 is completed, as you have stated earlier $10.00 is GST that is to be retained and submitted to the ATO.
> 
> If UBER then calculates it's 25% commission on $110.00 where in reality a driver only has $100.00 nett, what is UBER's commission percentage?


Hi Sydney Uber,
Using your example of $110.00 fare:
Amount of fare: $110
GST: $10
Commission @25% of gross fare: $27.50

Using this example, I think the point you are making is that the commission of $27.50 is actually 27.5% of the nett (GST exclusive) fare.

Whilst that is true, the amount of the commission is a commercial matter to be worked out between the facilitator and drivers, and it is not something that the ATO has control over.


----------



## MichaelATO

Instyle said:


> UBER have a large degree of control over driver activity, they operate at such low unsustainable rates but offer "Incentives" to be logged on at certain timeframes and accepting 90% of all incoming requests, as they like the comfort of employee-like control with only contractor conditions. Making it barely profitable unless you drive during incentive times and accept all requests.
> 
> Incentives payments are usually a minimum hourly top up, for example $30p/hr. If a driver only receives one request in that hour and grosses $10, UBER would top up to the hourly amount. Drivers would see an additional $20 in other payments not directly related to actually transporting anyone.
> 
> Would these other payments, similar to the $5 referral credit in (other payments) be subject to payable GST?


Hi Instyle

Thanks for this. To provide an answer we would need more information, please can you email us at [email protected] and we will be in touch to let you know what further information we need (it is not likely to be too much). When we have an answer we will put it up here. We appreciate that drivers would like to know the answer to this asap, and once we have the info, we'll post as soon as we can.


----------



## Sydney Uber

MichaelATO said:


> Hi Sydney Uber,
> Using your example of $110.00 fare:
> Amount of fare: $110
> GST: $10
> Commission @25% of gross fare: $27.50
> 
> Using this example, I think the point you are making is that the commission of $27.50 is actually 27.5% of the nett (GST exclusive) fare.
> 
> Whilst that is true, the amount of the commission is a commercial matter to be worked out between the facilitator and drivers, and it is not something that the ATO has control over.


Thank You


----------



## Jeffa0

I am really curious to all those complaining about the GST side of this.. Obviously it's the main argument, so let me try a reverse though process.

If you don't pay GST, do you still expect to be able to claim GST on your car, fuel, other products/services which are GST applicable??

If so, then you're getting a bit of an unfair deal aren't you?

I haven't done the maths, but I'd be keen to work out the actual GST payable to the ATO after you deduct your GST running costs, I think you'd have to pay for sure but I don't know that it's as "cut and dry" as what drivers seem to think.

I have driven for a partner for over 6 months, when I invoice him for the work I include GST and he also takes GST from his uber total as well.

I'm guessing this is the major difference between uberx and uber black.. Maybe uberx does need to rise even just 5% to assist in absorption of this tax news.

At the end of the day, I've been made aware that there are a lot of X drivers earning more than black, so one would think your ability to turn a dollar, collect GST and pay out after input credits etc shouldn't be that difficult.

I might do up a spreadsheet.. If any X drivers could message me their weekly fuel spend vs number of jobs vs income, that would help too.. 

Thanks Asst. Commissioner for your time, your information has assisted me on confirming what we've (I and my partner) already been doing. 

It's really cool that in 2015 the Asst. Commissioner has taken the time to assist drivers with their questions, whilst I feel some of the questions were a little out of the box, most were pretty good.

I do have one question for you Asst. Commissioner.. 

Most states at this point in time see Uber drivers as operating "illegal" taxi services.. OK? understood.. 
Why isn't the ATO actively targeting high-time drug dealers? (or are they??).

Whilst we can argue about the fact drugs are illegal, the premise is the same. Most larger scale dealers run a business, have expenses and quite a lot carry staff.
Regardless of legality, why is the ATO not pursuing that?

Imagine the revenue


----------



## Ghostwren

Jeffa0 said:


> I am really curious to all those complaining about the GST side of this.. Obviously it's the main argument, so let me try a reverse though process.
> 
> If you don't pay GST, do you still expect to be able to claim GST on your car, fuel, other products/services which are GST applicable??
> 
> If so, then you're getting a bit of an unfair deal aren't you?


The deal is unfair in that drivers are being asked to provide 100% of the GST from their 80% cut whereas cab drivers split their GST liability with the companies, that is they pay a percentage each based on their actual income. The counter argument, that we are only GST collectors would be true

1. If we had control over the price and the GST was added on top, which we don't, and which as Uber has it at present, they wont increase to compensate.
2. If we did not need to collect a disproportionately larger percentage of GST vs income compare to any other Australian enterprise, that is an effective rate of 12.5% (others say more).

We don't essentially have a problem with paying GST. We have do a problem with paying more than our fair share of the GST.

The ATO is saying to us that this is a matter for us to sort out with either our "facilitators" or legislators or the courts. They do not consider that they made this ruling in the light of the facts, that the facilitator will take a non GST applicable cut. The ATO has not taxed the facilitator at all and are allowing the current state of affairs to stand: the driver to carry all the GST burden, and all this without consulting with any Australian driver groups to our knowledge.


----------



## prk

Wow, just wow, if only UBER were as forthcoming with information as our own taxation office....notice the crickets from uber on this issue....well...kind of like their response to everything really.... oh ..yeah ...thanks for reaching out.....zzzzzzzzz


----------



## Jeffa0

Ghostwren said:


> The deal is unfair in that drivers are being asked to provide 100% of the GST from their 80% cut whereas cab drivers split their GST liability with the companies, that is they pay a percentage each based on their actual income. The counter argument, that we are only GST collectors would be true
> 
> 1. If we had control over the price and the GST was added on top, which we don't, and which as Uber has it at present, they wont increase to compensate.
> 2. If we did not need to collect a disproportionately larger percentage of GST vs income compare to any other Australian enterprise, that is an effective rate of 12.5% (others say more).
> 
> We don't essentially have a problem with paying GST. We have do a problem with paying more than our fair share of the GST.
> 
> The ATO is saying to us that this is a matter for us to sort out with either our "facilitators" or legislators or the courts. They do not consider that they made this ruling in the light of the facts, that the facilitator will take a non GST applicable cut. The ATO has not taxed the facilitator at all and are allowing the current state of affairs to stand: the driver to carry all the GST burden, and all this without consulting with any Australian driver groups to our knowledge.


Where's the evidence that taxi drivers split the GST???

As far as I know the taxi industry doesn't set their price (at least here in WA they don't?).. 
They also have huge licensing costs and also ON TOP of licensing have to pay a dispatch fee to swan taxis (or whoever) as well.
What % does that work out to of their earnings would be proportionate over their changing weekly earnings..

The funny part with the taxi industry is that they can still easily take cash fares, something which I feel the whole point of the GST on taxi's was to prevent that from happening.


----------



## Ghostwren

Jeffa0 said:


> Where's the evidence that taxi drivers split the GST???
> 
> As far as I know the taxi industry doesn't set their price (at least here in WA they don't?)..
> They also have huge licensing costs and also ON TOP of licensing have to pay a dispatch fee to swan taxis (or whoever) as well.
> What % does that work out to of their earnings would be proportionate over their changing weekly earnings..
> 
> The funny part with the taxi industry is that they can still easily take cash fares, something which I feel the whole point of the GST on taxi's was to prevent that from happening.


The licensing issue is a state issue which is why it is not really discussed here. Unless the cab driver is an owner driver they split it between cab driver and owner, a bailment arrangement:

"Bailment is a legal relationship between two parties, whereby the owner retains full rights to the assets or property but the possesses the property. For example, when a bank holds a borrower's asset as collateral for a secured loan, this is a form of bailment." Source: http://www.investopedia.com/terms/b/bailment.asp

The taxi owner charges a percentage back to the cab driver as the commissioner explained, then the driver can claim both 100% GST input credits on it, then deduct the balance on income tax, whilst also being able to deduct GST input credits they have on any other business expenses they accumulate (expenses which many say are few and they might be right, and if that is the case good for them. But compare the costs of share drivers who cover all these expenses themselves and still need to pay a higher effective rate of GST then they do!)

The difference is that share drivers cannot claim back the GST input tax credits on the facilitator share as cabbies can. Share drivers can only claim income tax on _the facilitator cut_ which you only get back at a rate of say 19c on the dollar, not 100% return as you do on GST input tax credits.


----------



## Ghostwren

It's like the ATO is collecting GST off share drivers as if we were both the cab driver and the cab company but we are only one entity: a driver (who is silly enough to provide all the costs to the facilitator off our own backs and still give them a big cut for access to a lousy app that generally persecutes us), as if the facilitator (facilitator who we would argue is the equivalent to a cab company if they want to classify us as a taxi service) did not exist in the ATO's eyes. But is true that unless we mount a court case they will not change. This was clarified in the forum today.

The next avenue to address these issues is with the politicians, but so far they have been pretty quiet.


----------



## Ghostwren

MichaelATO said:


> Hi Ghostwren. It's good to see you providing some example. I assume you are saying that the cab driver gets 50% of the fare under a bailment arrangement or something similar with the owner of the taxi cab.
> 
> I think it would be more accurate to say for a taxi driver:
> Fare was $55.
> GST was $5 (payable by driver).
> Driver pays $27.50 for bailment (using you figures) and can claim a $2.50 GST credit
> Driver pays net GST of $2.50 ($5 GST - $2.50 GST credit) to ATO out of the $27.50 it receives.
> 
> Driver claims $25.00 ($27.50 - $2.50 GST credit) as an income tax deduction in an income tax return at the end of the year.
> 
> For an Uber driver:
> Fare was $55.
> GST was $5.
> Driver pays $11 for commission (my figure for this example (20% of $55))
> Driver pays $5 in GST to ATO out of the $44 it receives less any input tax credits for example on fuel.
> 
> Driver claims the full $11 commission as a business expense in an income tax return at the end of the year.
> 
> The ATO is applying the law equally, it's just that under one model there can be a bailment expense and under another model there is an offshore commission expense.


*We now know that the minimum % a cab driver can be paid is 55% in Victoria.*
"1.3. The Operator must not charge the Driver any fee or surcharge that would be subtracted from the Driver's agreed share of the Gross Fares (which must be at least 55 per cent)."
http://www.taxi.vic.gov.au/__data/assets/pdf_file/0015/213531/Implied-Conditions.pdf

In this example, the facilitator fees v's bailment fees is the expense the Asst Commissioner recommends we explore and compare, thank you for this correction Mr Hardy. Now that we do know the actual minimum percentages a (Victorian) cab driver can make, a real comparison can be made using the Commissioner Guidance.

*This equation as corrected by the Asst. Commissioner here (my comments in green):*
I think it would be more accurate to say for a taxi driver:
Fare was $55.
GST was $5 (payable by driver).
Driver pays *$24.75** bailment fees and can claim a *$2.25** GST credit
Driver pays net GST of *$2.75** ($5 GST - *$2.25** GST credit) to ATO out of the* $30.25** it receives.

Driver claims *$22.50** (*$24.75*-$2.25** GST credit) as an income tax deduction in an income tax return at the end of the year. *This ITD amounts to 19c on the dollar or $22.50 x .19c = $4.27

The cab driver has paid income tax of 19c on the dollar on his take home pay: $30.25 x .19c = $5.75, then claimed back $4.27 in income tax deductions and $2.25 in input tax credits on the bailment fee and all the other expenses have been covered on this fare by bailment arrangements (this is not so with family owned taxi plates). *

*Where does cab driver stand after all this?
$30.25 - outstanding GST $2.75 - income tax $5.75 + ITD deduction $4.27 
= $26.02 nett take home pay

They were able to claim back GST input credits dollar for dollar, not at 19c on the dollar which is what you get back from income tax deductions (depending on your income tax bracket).
(*updated to reflect the regulated minimum 55% cut for the cab driver) on the same fare, there were a total of $2.25 GST tax credit inputs to claim back.
*
For an Uber driver:
Fare was $55.
GST was $5.
Driver pays $11 for commission (my figure for this example (20% of $55))
Driver pays $5 in GST to ATO out of the $44 it receives less any input tax credits for example on fuel.

Driver claims the full $11 commission as a business expense in an income tax return at the end of the year.

*Because the commissioner has bought income tax and other difficult to compare business costs into the equation, we must make a few more assumptions. We use the Uber fare calculator and base the estimations on a budget car so it should be fair.

Share Driver
$55 fare (Camberwell to Tullermarine, 36 KM, 2 hour total inc return trip) had the following expenses:

Working with some very efficient fuel costs at .15c per km and a budget price car, for this ride it costs the driver:

• 15c x 36km x 2 for the return journey which is $10.80 fuel 
• Comprehensive Car Insurance (Not commercial as it blows this estimate out of the water) is $525 per year, there are 8765.81277 hours in a year, so
$525 divided by 8765.81277 = .059c or .06c per hour x 2 = .12c
• Car servicing is $500 per year / 8765.81277 = .06c per hour x 2 = .12c
• Registration is $719.90 per year / 8765.81277 = .08c per hour x 2= .16c
• Assume only 1 text was sent to the passenger in the 2 hours. Each message = .25c
• Assume wear and tear of $600 per year (tyres, windscreen wiper blades, brake pads, clutch cable etc. Lets say any combo of one or two) $600 / 8765.81277 = .07c per hour x 2 = .14c
plus car depreciation, hard to calculate for this one trip but lets say it was .40c, and we will leave out drinks and lollies for balance. 
= business costs of $11.59 for this trip + 40c depreciation which does not attract GST

The GST credit from these business costs (total of $11.59) will be: $1.05c, leaving a GST bill of $3.95 GST owing
The income tax deduction will be $11 (uber cut) + $10.94 (ex gst business costs) = x 19c on the dollar = $4.17

$55.00 - $11 Uber Cut - $3.95 GST outstanding - $10.94 ex GST bus costs= taxable income $29.65 work out income tax @19c on the dollar again = $5.63 then subtract ITD = $1.46 outstanding income tax bill =*

*GRAND TOTAL for the share driver of $27.79 net or $13.90 per hour.

What we don't know is how long it took the cab driver to earn the $55 cab fare...using a Taxi Victoria fare calculator the same trip Camberwell to Tullermarine would have cost $85- $95 in a cab. Plus they would have been able to stay at Melb Airport to pick up another fare, not need to drive back to town. So knowing this we can estimate that they are making roughly 1.5 to 2 times as much per hour as a share driver whilst in a paying fare.... but cabs do have a demand problem, yet another story!*

Way to complicate a simple equation Mr Hardy, but worth it!

After all that the point still carries: SHARE DRIVERS WILL HAVE PROPORTIONALLY LESS GST INPUT CREDITS, THEREFORE ARE UNFAIRLY PAYING MORE GST THAN TAXI DRIVERS

*It took the cabby roughly half the time to accumulate double the amount of GST input credits: 
SD: 2 hours work earned $1.05 credits 
v's 
CD: 1 hours work earned $2.25 credits*

It might have been easier to leave it at the first simple sum but now we have a fairer comparison, comparing all costs of both parties with all credits and deductions so now there is a deeper understanding. In terms of GST input credits and the real time accumulation rate it now appears the ruling actually has share drivers about 4 times worse off when compared to cabbies.


----------



## UberPlates

I understand that there's no word on any rate rise from Uber in Australia,
to counter the effect of GST compliance effective as of yesterday 1/8/2015
I guess it's now being left for the driver to wear the additional GST cost.
It's not 10% less than I used to take now, is it? Is it 12.5%? or more again?
I'm still not certain. I will comply with the new ABN/GST requirements,
but Ubering is becoming more of a hobby rather than an income stream.


----------



## Ghostwren

Yep, no word other than they are taking the ATO to court.


----------



## camoflage

"There was mention in the news a while back saying that the price drop was until the 02/08 , but as said there's no news on that


----------



## Ghostwren

If we make enough noise in the media, they may increase the price
like this....*cough*
http://www.theage.com.au/victoria/u...ing-gst-deadline-20150802-gipojc.html?stb=twt


----------



## DukeOfDallas

buy low and sell high - Alan


----------



## MichaelATO

Ghostwren said:


> Mr Hardy I think share drivers would suggest that it is a new tax. Could this ruling be running at a cost to the Australian Taxpayer?


Hi Ghostwren.

Its just the existing law applied to commercial innovation. There is nothing new about it.


----------



## MichaelATO

Ghostwren said:


> Sorry, Asst Commissioner but that assumption is not really accurate because we don't know what the taxi/bailment arrangement is. The equation simply compares business expenses regardless of what those expenses are.
> 
> The point I'd like the answer for is:
> 
> Proportionately, the input credits of share driver will still make up a smaller part of their GST bill because they don't split the GST with the OS Facilitator, is this not correct?


Hi Ghostwren.

It looks like I misunderstood the source of the 50% element in your example. I see you have also posted back to the input of other members in other posts.

I'm not going to try to play with more figures. As you note it gets quite complicated and there seem to be some assumptions in your material that I don't think are correct. However, I do want to focus on the material where we can agree.

The bottom line is that:
- in both cases the driver is responsible for remitting 1/11th of the fare;
- in both cases the driver can claim input tax credits

As it seems that the main difference in cost structures is the bailment cost for a taxi driver compared to the commission cost for a ride sourcing driver, and from what I understand, the bailment cost is generally a higher cost than the commission cost. If this is true and we just isolate this cost element, then for a $55 fare, both drivers will have a $5 gross GST obligation and the $5 will be a greater proportion of a taxi driver's "take home" money than it will be for the ride sourcing driver.


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## MichaelATO

Jeffa0 said:


> I am really curious to all those complaining about the GST side of this.. Obviously it's the main argument, so let me try a reverse though process.
> 
> If you don't pay GST, do you still expect to be able to claim GST on your car, fuel, other products/services which are GST applicable??
> 
> If so, then you're getting a bit of an unfair deal aren't you?
> 
> I haven't done the maths, but I'd be keen to work out the actual GST payable to the ATO after you deduct your GST running costs, I think you'd have to pay for sure but I don't know that it's as "cut and dry" as what drivers seem to think.
> 
> I have driven for a partner for over 6 months, when I invoice him for the work I include GST and he also takes GST from his uber total as well.
> 
> I'm guessing this is the major difference between uberx and uber black.. Maybe uberx does need to rise even just 5% to assist in absorption of this tax news.
> 
> At the end of the day, I've been made aware that there are a lot of X drivers earning more than black, so one would think your ability to turn a dollar, collect GST and pay out after input credits etc shouldn't be that difficult.
> 
> I might do up a spreadsheet.. If any X drivers could message me their weekly fuel spend vs number of jobs vs income, that would help too..
> 
> Thanks Asst. Commissioner for your time, your information has assisted me on confirming what we've (I and my partner) already been doing.
> 
> It's really cool that in 2015 the Asst. Commissioner has taken the time to assist drivers with their questions, whilst I feel some of the questions were a little out of the box, most were pretty good.
> 
> I do have one question for you Asst. Commissioner..
> 
> Most states at this point in time see Uber drivers as operating "illegal" taxi services.. OK? understood..
> Why isn't the ATO actively targeting high-time drug dealers? (or are they??).
> 
> Whilst we can argue about the fact drugs are illegal, the premise is the same. Most larger scale dealers run a business, have expenses and quite a lot carry staff.
> Regardless of legality, why is the ATO not pursuing that?
> 
> Imagine the revenue


Hi Jeffa0.

In relation to your question about drug dealers the ATO does work with police forces and other law enforcement agencies if there is a tax to be paid from illegal activities. Income from illegal activities is still taxable.

Having said that, the ATO is only responsible for interpreting and administering Commonwealth tax legislation. We don't make a determination whether something is or is not illegal for other purposes, that's for other agencies.


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## Ghostwren

MichaelATO said:


> Hi Ghostwren.
> 
> It looks like I misunderstood the source of the 50% element in your example. I see you have also posted back to the input of other members in other posts.
> 
> I'm not going to try to play with more figures. As you note it gets quite complicated and there seem to be some assumptions in your material that I don't think are correct. However, I do want to focus on the material where we can agree.
> 
> The bottom line is that:
> - in both cases the driver is responsible for remitting 1/11th of the fare;
> - in both cases the driver can claim input tax credits
> 
> As it seems that the main difference in cost structures is the bailment cost for a taxi driver compared to the commission cost for a ride sourcing driver, and from what I understand, the bailment cost is generally a higher cost than the commission cost. If this is true and we just isolate this cost element, then for a $55 fare, both drivers will have a $5 gross GST obligation and the $5 will be a greater proportion of a taxi driver's "take home" money than it will be for the ride sourcing driver.


Not quite right, we cannot isolate the costs because then we cannot measure GST Input tax credits which was the point. You must measure all cost of both, this is what I've done.


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## Ghostwren

MichaelATO said:


> I see you have also posted back to the input of other members in other posts.


Several conversations have transpired in the post, I don't think many of us realised you'd be popping back to answer more after the last time, that's why I sent that question into the ATO directly. The Brisbane forum has drifted right of track. I am keen to hear back about the ATO's call on the code bonuses and hourly income guarantees. As these are not services, I'm guessing no GST? Sorry about the cheeky comment about that!


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## Instyle

MichaelATO said:


> Hi Instyle
> 
> Thanks for this. To provide an answer we would need more information, please can you email us at [email protected] and we will be in touch to let you know what further information we need (it is not likely to be too much). When we have an answer we will put it up here. We appreciate that drivers would like to know the answer to this asap, and once we have the info, we'll post as soon as we can.


Hi MichaelATO,

I'll post a follow up here to your question rather than email at this stage so other ride-sourcing drivers can benefit from a transparent explanation. Detail to Uber's hourly rates concealed under the term "incentives" can be found at;

http://www.uberqld.info/incentives-bne/

As mentioned earlier, uber forces such low rates onto what they define as independent contractors. By having such low unsustainable rates they can control staff by the hidden term "incentives" meaning hourly rate. Uber, in effect can have staff work their intended hours while rates are payable to employee drivers who maintain uber standards for example 90% acceptance of incoming trips regardless of distance, location or passenger rating* all while drivers must uphold a higher rating than 4.6 out of 5. Some examples can be seen on forums of incoming requests from 28-32 mins away, without seeing the intended destination, such trips can be a gross of $6 all with the fear of losing the hourly rate. The system is very manipulated by uber to yield financial results by dishonesty and unrealistic targets.

Two parts to this enquiry; further information to support employer like behaviour and the other is GST obligation on hourly rate pay which is not directly related to a specifically transporting anyone. Example, in an hour I may transport someone for a gross fare of $10 inc GST, I then have also received $20 from Uber for being online that whole hour. Hourly pay defined as Incentives in this example of $20 other payments would be GST free right? Foreign money deposited from Amsterdam which doesn't relate to a specific trip.


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## MichaelATO

Instyle said:


> Hi MichaelATO,
> 
> I'll post a follow up here to your question rather than email at this stage so other ride-sourcing drivers can benefit from a transparent explanation. Detail to Uber's hourly rates concealed under the term "incentives" can be found at;
> 
> http://www.uberqld.info/incentives-bne/
> 
> As mentioned earlier, uber forces such low rates onto what they define as independent contractors. By having such low unsustainable rates they can control staff by the hidden term "incentives" meaning hourly rate. Uber, in effect can have staff work their intended hours while rates are payable to employee drivers who maintain uber standards for example 90% acceptance of incoming trips regardless of distance, location or passenger rating* all while drivers must uphold a higher rating than 4.6 out of 5. Some examples can be seen on forums of incoming requests from 28-32 mins away, without seeing the intended destination, such trips can be a gross of $6 all with the fear of losing the hourly rate. The system is very manipulated by uber to yield financial results by dishonesty and unrealistic targets.
> 
> Two parts to this enquiry; further information to support employer like behaviour and the other is GST obligation on hourly rate pay which is not directly related to a specifically transporting anyone. Example, in an hour I may transport someone for a gross fare of $10 inc GST, I then have also received $20 from Uber for being online that whole hour. Hourly pay defined as Incentives in this example of $20 other payments would be GST free right? Foreign money deposited from Amsterdam which doesn't relate to a specific trip.


_Hi Instyle,_

_Thanks for the further information.
From the information you have provided, If an offshore facilitator makes 'incentive payments' to you for operating during certain times and these payments are not connected to a trip, they will NOT be subject to GST._

_To use your example, if you receive a $10 fare for 1 trip and a $20 incentive payment that is not connected to that trip, you will only need to pay GST on the $10 fare (i.e. 1/11th of $10). 
When you are completing your BAS, you should report the $20 amount as GST-free. _

_If you receive a payment that is connected to a trip (even if it is labelled an 'incentive payment') or if you receive a payment under an agreement with a different entity that is based in Australia (such as a marketing or promotional entity) the GST outcome may be different._

_If you are uncertain about the GST treatment of a particular payment, you have two main options. The first is to obtain advice from a qualified tax adviser. The second is to write to the ATO seeking a private ruling. _


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## MichaelATO

Everyone,

Thanks again for your active participation on the forum leading up to the 1 August GST cut-off date. Our goal was to cut through the ambiguity to provide drivers with accurate tax information, so I hope you found the Q&A helpful and have a better understanding of how tax applies to your situation as a ride-sourcing provider.

I'm signing off the forum for now but I encourage you to refer back to this Q&A and our web content for further information on ride-sourcing and tax. We've added new Q&As to our webpage ato.gov.au/ridesourcing and make regular updates to keep advice relevant. If you have further tax or super questions you can contact us by phone or write to us https://www.ato.gov.au/About-ATO/About-us/Contact-us/

- Michael


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## MichaelATO

Hi UberPeople.net members

Due to popular demand, we are hosting a free ride-sourcing webinar presentation on the Let's talk platform on Wednesday 21 October at 11am - 12pm AEDT.

Register now to find out more about tax consequences for ride-sourcing, in particular:

income tax and GST requirements

deductions that can be claimed
how to prepare and lodge your business activity statement
data matching
Join me and my team to have your questions answered.

Send us your questions when you register to attend, during the webinar presentation itself, or by posting your questions to the Q&A section of Let's talk before the presentation begins.

- Michael


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## UberPlates

MichaelATO said:


> Hi UberPeople.net members
> 
> Due to popular demand, we are hosting a free ride-sourcing webinar presentation on the Let's talk platform on Wednesday 21 October at 11am - 12pm AEDT.
> 
> Register now to find out more about tax consequences for ride-sourcing, in particular:
> 
> income tax and GST requirements
> 
> deductions that can be claimed
> how to prepare and lodge your business activity statement
> data matching
> Join me and my team to have your questions answered.
> 
> Send us your questions when you register to attend, during the webinar presentation itself, or by posting your questions to the Q&A section of Let's talk before the presentation begins.
> 
> - Michael


 Thanks Michael! 

................


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