16 March 2017

Uber drivers to register for GST

Uber launched in Cairns today and more than 3000 Cairns residents have applied to become Uber drivers.  The recent decision of the Federal Court in Uber B.V. v Commissioner of Taxation [2017] FCA 110 will be of particular interest to those in the Far North who have applied or are interested in applying to drive for Uber.

The ride-sharing service has been legal to use and operate in Queensland since 5 September 2016.  The legalisation accompanied a suite of changes to the rules regulating the taxi industry in the interests of levelling the playing field between traditional taxi operators and ride sharing companies.  Consistent with the aim for a level playing field, on Friday 17 February 2017 the Federal Court found that the Uber service is a supply of ‘taxi travel’ within the meaning of the current Goods and Services Tax (GST) legislation.

This decision means that all Uber drivers will need to be registered for and pay GST from the first dollar they earn.  Generally a service provider is not required to register for or charge/pay GST if their turnover is less than the legislated threshold of $75,000.00.  However, services for ‘taxi travel’ are excluded from gaining the benefit of this threshold.

Uber argued that because their operators do not utilise a taxi meter, taxi ranks or roadside hailing (among other reasons) that they were not supplying a ‘taxi travel’ service under the GST legislation.  However, these arguments were not accepted by the Federal Court, which found that the definition of ‘taxi travel’ in the legislation should be given its ordinary meaning and not a specialised industry meaning.

If you are thinking about applying to be an Uber driver in Cairns you will need to make sure that you are registered for GST to avoid a nasty tax bill or fine from the tax office.

The full decision of the Federal Court can be found here.

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