# GST and Uber commissions from 1 July 2017



## Jack Malarkey

At present, we can't claim a GST input tax credit on the commission we pay to Uber. This is because Uber doesn't charge us GST on the commission. It doesn't need to as the GST law now applies because we pay the commission to a foreign-resident entity, which is based in the Netherlands.

The position, however, can be expected to change from 1 July 2017 because of amendments to the GST law that the Australian Parliament has already enacted to give effect to a 2016-17 Budget measure.

The amendments were in the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Act 2016, which received Royal Assent on 5 May 2016. These measures, however, apply only from 1 July 2017.

The amendments ensure that GST is applied consistently to the supply of digital products and other imported services.

I expect that if this legislation affects it (as I consider likely), Uber will charge us a separate GST charge on top of the commission it already charges us. We will then be able to claim a GST input tax credit against the GST we pay as drivers.

This is conceptually correct. Note, however, we will be worse off from a timing perspective as we will need to pay the GST each time we pay the commission but obtain the benefit of the input tax credit up to several months later.

Uber continues to charge us commission on the GST component of our fares, which strikes me as a double dip, unfair and wrong in principle. We can only hope that if Uber does pass on the GST on the commission to us as drivers, it takes the opportunity to remove its commission on the GST component of the fares. But don't hold your breath on that one.

For more information about the recent amendments to the GST law, see https://www.ato.gov.au/General/New-...-products-and-services-imported-by-consumers/.


----------



## Who is John Galt?

Thank you Jack.


----------



## Instyle

If they add 10% GST on top of their commision, everyone better make sure Uber are only taking a commision on fares excluding GST figure and encourage all to take a stand to this race to the bottom, otherwise that is another cut to drivers incomes!


----------



## RexDaddy71

Instyle said:


> If they add 10% GST on top of their commision, everyone better make sure Uber are only taking a commision on fares excluding GST figure and encourage all to take a stand to this race to the bottom, otherwise that is another cut to drivers incomes!


I hear what you are saying but I don't think it is quite correct. There would be no further cut to drivers income if they added 10% GST to their commission.

The agreement clearly states that their commission is calculated on the fare charged including any applicable taxes (ie: GST). Which means currently we pay 20%/25% of the total fare charged which is the same as 22%/27.5% of the fare excluding GST.
eg: (@20% commission) $11 fare has GST component of $1 and commission taken by Uber is $2.20. You receive $8.80 in to your bank account and have to pay the $1 GST in your BAS. Your net result is $7.80.

If Uber add GST to their commission then it changes the commission amounts to 22% and 27.5% of the fare charged which is the same as 24.2%/30.25% of the fare excluding GST.
So (@22% commission), $11 fare has GST component of $1 and commission taken by Uber is $2.42. You receive $8.58 in to your bank account and have to pay the $1 GST and get to claim $0.22 GST in your BAS. Your net result is still $7.80.

The only difference is that you receive less money in your bank account from Uber but then you pay the same amount less at BAS time.


----------



## Instyle

RexDaddy71 said:


> I hear what you are saying but I don't think it is quite correct. There would be no further cut to drivers income if they added 10% GST to their commission.
> 
> The agreement clearly states that their commission is calculated on the fare charged including any applicable taxes (ie: GST). Which means currently we pay 20%/25% of the total fare charged which is the same as 22%/27.5% of the fare excluding GST.
> eg: (@20% commission) $11 fare has GST component of $1 and commission taken by Uber is $2.20. You receive $8.80 in to your bank account and have to pay the $1 GST in your BAS. Your net result is $7.80.
> 
> If Uber add GST to their commission then it changes the commission amounts to 22% and 27.5% of the fare charged which is the same as 24.2%/30.25% of the fare excluding GST.
> So (@22% commission), $11 fare has GST component of $1 and commission taken by Uber is $2.42. You receive $8.58 in to your bank account and have to pay the $1 GST and get to claim $0.22 GST in your BAS. Your net result is still $7.80.
> 
> The only difference is that you receive less money in your bank account from Uber but then you pay the same amount less at BAS time.


Agree with your calculations, though it's in poor taste for a company where the drivers had to take the fare as GST included after the ATO ruling instead of adding the 10% additional as GST.

In your example Uber would be taking close to 28% commission inclusive of GST. 25-28% Commission is a huge chunk for a company that doesn't have any vehicular expenses.


----------



## Bambuflute

In Australia, since 1st August 2017, Uber Driver Partners pay Uber’s share of GST on Uber's 25% commission, which effectively means that the Uber commission is 27.5% (including GST), not 25%. In July 2017 Uber updated their terms and conditions, which now say that for drivers who signed up after 24 April 2016, Uber’s commission is 27.5%. So, although drivers may think that they are paying a 25% commission, it is a 27.5% commission. For drivers who signed up prior to 24 April 2016, their commission went up from 20% to 22%. This is what you need to know in order to account for the GST on Uber’s fee / commission.
If you are on the 20% rate, then the actual fee is 22% including GST. If you are on the 25% commission, then the actual commission is 27.5% including GST. I think many drivers failed to read or understand what they were agreeing to when they agreed to the updated terms and conditions.


----------



## Craig Dallie

Bambuflute said:


> In Australia, since 1st August 2017, Uber Driver Partners pay Uber's share of GST on Uber's 25% commission, which effectively means that the Uber commission is 27.5% (including GST), not 25%. In July 2017 Uber updated their terms and conditions, which now say that for drivers who signed up after 24 April 2016, Uber's commission is 27.5%. So, although drivers may think that they are paying a 25% commission, it is a 27.5% commission. For drivers who signed up prior to 24 April 2016, their commission went up from 20% to 22%. This is what you need to know in order to account for the GST on Uber's fee / commission.
> If you are on the 20% rate, then the actual fee is 22% including GST. If you are on the 25% commission, then the actual commission is 27.5% including GST. I think many drivers failed to read or understand what they were agreeing to when they agreed to the updated terms and conditions.


That is only if the driver did not register for GST.


----------



## Who is John Galt?

Craig Dallie said:


> That is only if the driver did not register for GST.


Perhaps you mean - or, did not supply an ABN to Über.
.


----------



## Bambuflute

Hi Craig, thanks. So can you please clarify why my conditions say that I have to pay the extra 2.5%? I have been registered for GST since I started in January this year, I have been paying it every quarter, and Uber have my registration for GST and ABN from the beginning. I have been to the office and double checked this. So are you telling me that I'm double paying on the GST component, because Uber are already paying it? That was not my interpretation. Do you have a link for clarification of this? Cheers

Just to clarify, Uber deduct 25% commission from my pay. Are you saying that they pay their share of GST on that commission?


----------



## UberDriverAU

Bambuflute said:


> Just to clarify, Uber deduct 25% commission from my pay. Are you saying that they pay their share of GST on that commission?


Sounds like you have provided your ABN and GST details to Uber, so in your case their fees are GST free.

People need to think about what it means to pay GST for someone. I'm on 22% inclusive of GST, so using the following example:

Fare: $55.00
Uber's Fee: $12.10
GST on Fare: $5.00
GST on Uber's Fee: $1.10

If I was paying Uber's GST on top of my own, then I would be paying $5.00 to the ATO. In reality I pay $3.90 to the ATO because I get a GST credit for the GST payable by Uber, and Uber makes a separate payment to the ATO of $1.10.


----------



## Bambuflute

So you did not give your ABN & GST registration to Uber, and they pay GST on their fee for you instead, which is why you can claim a GST input credit?


----------



## UberDriverAU

Bambuflute said:


> So you did not give your ABN & GST registration to Uber, and they pay GST on their fee for you instead, which is why you can claim a GST input credit?


Correct, I have not given them my details. They pay GST on their own behalf though, not for me. This is the way GST is designed to work. If I incur a business expense and the price includes GST, then the supplier pays GST and I can claim a credit for it. The end result is that they pay a bit more GST, and I pay an equal amount less, and the net effect is no change in GST revenue for the government. It's only where purchases are fully or partly for domestic or private purposes that more money reaches the government's coffers.


----------



## Bambuflute

In that case, I am not double paying. I just simply pay their bit of the GST for them. In either case, I have no more money than I would if they were paying it, because they would deduct a bigger fee to cover the GST. My original comment is correct, but only for those people who have given their ABN & GST registration to Uber. For driver partners who do not give their GST registration to Uber (only some drivers on the old 20% rate I think), then Uber pays the GST. I was told when I signed up in January 2017 that I must give my ABN, and as part of that I gave my GST registration. When Uber released the new terms and conditions in July, I laughed out loud, because I was already paying the extra 2.5% for their GST. It changed nothing for me, but I realised that technically, I could probably go back and readjust for the GST component I had paid for them prior to 1 August (but I won't, because it's too much hassle).


----------



## Paul Collins

Uber’s fees are on the total fare inc gst and this is Uber taking a percentage of a tax. If it was like credit card merchant charges their fee would also be gst inc, then drivers could claim the credit when they quote their abn to Uber.


----------



## UberDriverAU

Paul Collins said:


> Uber's fees are on the total fare inc gst and this is Uber taking a percentage of a tax. If it was like credit card merchant charges their fee would also be gst inc, then drivers could claim the credit when they quote their abn to Uber.


We've been through this before Paul. If you provide your ABN and state you are GST registered to Uber, they are not required to pay GST because they are a foreign entity, and you therefore cannot claim a GST credit. The situation is different for payment providers who are local entities who must pay GST regardless. Please don't derail yet another thread with your misunderstandings of GST.


----------



## Hugh G

*


UberDriverAU said:



Please don't derail yet another thread......

Click to expand...









*

*Derailment (thought disorder)*

From Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/Derailment_(thought_disorder)

In psychiatry, *derailment* (also *loosening of association*, *asyndesis*, *asyndetic thinking*, *knight's move thinking*, or *entgleisen*) is a thought disorder characterized by discourse consisting of a sequence of unrelated or only remotely related ideas. The frame of reference often changes from one sentence to the next.[1][2]

In a mild manifestation, this thought disorder is characterized by slippage of ideas further and further from the point of a discussion.

Derailment can often be manifestly caused by intense emotions such as euphoria or hysteria.

Some of the synonyms given above (_loosening of association_, _asyndetic thinking_) are used by some authors to refer just to a _loss of goal_: discourse that sets off on a particular idea, wanders off and never returns to it.

A related term is tangentiality-it refers to off-the-point, oblique or irrelevant answers given to questions.[1]

In some studies on creativity, _knight's move thinking_, while it describes a similarly loose association of ideas, is not considered a mental disorder or the hallmark of one; it is sometimes used as a synonym for lateral thinking


----------



## Paul Collins

Hugh G said:


> *
> 
> 
> 
> 
> 
> 
> 
> *
> 
> *Derailment (thought disorder)*
> 
> From Wikipedia, the free encyclopedia
> https://en.wikipedia.org/wiki/Derailment_(thought_disorder)
> 
> In psychiatry, *derailment* (also *loosening of association*, *asyndesis*, *asyndetic thinking*, *knight's move thinking*, or *entgleisen*) is a thought disorder characterized by discourse consisting of a sequence of unrelated or only remotely related ideas. The frame of reference often changes from one sentence to the next.[1][2]
> 
> In a mild manifestation, this thought disorder is characterized by slippage of ideas further and further from the point of a discussion.
> 
> Derailment can often be manifestly caused by intense emotions such as euphoria or hysteria.
> 
> Some of the synonyms given above (_loosening of association_, _asyndetic thinking_) are used by some authors to refer just to a _loss of goal_: discourse that sets off on a particular idea, wanders off and never returns to it.
> 
> A related term is tangentiality-it refers to off-the-point, oblique or irrelevant answers given to questions.[1]
> 
> In some studies on creativity, _knight's move thinking_, while it describes a similarly loose association of ideas, is not considered a mental disorder or the hallmark of one; it is sometimes used as a synonym for lateral thinking


Like this post. Got it.


----------



## ST DYMPHNA son

Paul Collins said:


> Like this post. Got it.


Thanks God,how many hints do you need....


----------



## Paul Collins

ST DYMPHNA son said:


> Thanks God,how many hints do you need....


And this post. Got it.


----------



## UberDriverAU

Paul Collins said:


> Uber's fees are on the total fare inc gst and this is Uber taking a percentage of a tax. If it was like credit card merchant charges their fee would also be gst inc, then drivers could claim the credit when they quote their abn to Uber.


It looks like you are going to get your wish Paul. From the 1st of December 2017, Uber will start operating through an Australian company and GST will be payable on all Uber fees regardless of whether or not your ABN and GST details have been supplied. Services fees will be 22% or 27.5% inclusive of GST for all drivers. Now we can all rejoice because Uber will be "paying their share of the GST" for all drivers, and not just the privileged few.


----------



## ST DYMPHNA son

UberDriverAU said:


> It looks like you are going to get your wish Paul. From the 1st of December 2017, Uber will start operating through an Australian company and GST will be payable on all Uber fees regardless of whether or not your ABN and GST details have been supplied. Services fees will be 22% or 27.5% inclusive of GST for all drivers. Now we can all rejoice because Uber will be "paying their share of the GST" for all drivers, and not just the privileged few.


...the Power Of The Petition....I have no doubt that direct phone line to uber and his Great Knowledge Of Everything resulted with uber have no other options but Paul's Way .....


----------



## Paul Collins

UberDriverAU said:


> It looks like you are going to get your wish Paul. From the 1st of December 2017, Uber will start operating through an Australian company and GST will be payable on all Uber fees regardless of whether or not your ABN and GST details have been supplied. Services fees will be 22% or 27.5% inclusive of GST for all drivers. Now we can all rejoice because Uber will be "paying their share of the GST" for all drivers, and not just the privileged few.


Wrong. You must not have read or understood the petition. This dec 1 change means exactly the same income to drivers. 
I wanted Uber to charge their fee on the total fare excluding gst or for their fee to be gst inclusive as 20 or 25%, then Drivers would have made more income.
$39 is not $40, right.


----------



## ST DYMPHNA son

Paul Collins said:


> Wrong. You must not have read or understood the petition. This dec 1 change means exactly the same income to drivers.
> I wanted Uber to charge their fee on the total fare excluding gst or for their fee to be gst inclusive as 20 or 25%, then Drivers would have made more income.
> $39 is not $40, right.


as far as I know five people read it and I was not amongst them...


----------



## UberDriverAU

Paul Collins said:


> Wrong. You must not have read or understood the petition. This dec 1 change means exactly the same income to drivers.
> I wanted Uber to charge their fee on the total fare excluding gst or for their fee to be gst inclusive as 20 or 25%, then Drivers would have made more income.
> $39 is not $40, right.


But the problem you have (ie. "Uber should be taking their fee based on the total fare excluding GST") no longer exists? If what you're really after is a reduction in Uber's service fee, perhaps you should start a new petition?


----------



## Paul Collins

UberDriverAU said:


> But the problem you have (ie. "Uber should be taking their fee based on the total fare excluding GST") no longer exists? If what you're really after is a reduction in Uber's service fee, perhaps you should start a new petition?


That is exactly what the petition is for. A reduction in Uber fees.
If Uber were to calculate their gst inc fee on the total fare ex gst, drivers would make more income.



ST DYMPHNA son said:


> as far as I know five people read it and I was not amongst them...


No members here are of any real value really. All the petition signatures came from my social media groups I suspect.


----------



## ST DYMPHNA son

Paul Collins said:


> That is exactly what the petition is for. A reduction in Uber fees.
> If Uber were to calculate their gst inc fee on the total fare ex gst, drivers would make more income.
> 
> No members here are of any real value really. All the petition signatures came from my social media groups I suspect.


...you are great guy,you have a fantastic way to make people laugh....



Paul Collins said:


> That is exactly what the petition is for. A reduction in Uber fees.
> If Uber were to calculate their gst inc fee on the total fare ex gst, drivers would make more income.
> 
> No members here are of any real value really. All the petition signatures came from my social media groups I suspect.


...nice to know...
but hope that you stay on this forum,there is no one else as special as you...


----------



## Jack Malarkey

My prediction in the original post (made back in February) proved to be correct but with a hiccup along the way and five months late, and with an Australian entity thrown in for good measure.


----------

