Wednesday, May 20, 2015

Taxman cometh for digital disrupter Uber

Online services such as Uber will be chased for GST and other taxes as the Australian Tax Office moves to crack down on new players in the digital economy.

With a broad digital brush, the taxman is targeting two new and increasingly popular operators — taxi service Uber and online accommodation finder Airbnb. 

The ATO said they were no different from traditional bricks and mortar businesses and warned digital competitors they also needed to pay tax and collect the 10 per cent GST from their customers.

Listen to my interviews with ATO deputy commissioner James O'Halloran and Uber director of public policy Brad Kitschke

"The existing law applies equally whether the buyer or seller come together at a bricks and mortar business or via a mobile phone app or a website," Deputy Tax Commissioner James O'Halloran told AM.

Using the example of Uber, Mr O'Halloran said drivers must register for GST, charge GST on full fares, lodge business activity statements and report all income in their tax returns.

"We understand that people don't often consider the tax consequences of new and emerging business models," Mr O'Halloran said.

"Our first step is to assist taxpayers involved in the sharing economy to meet their tax obligations." 

In releasing today's advice, the ATO used the term "collaborative consumption activities" to describe digital players like Uber, Airbnb, certain parking services and any business offering to provide goods and services to a consumer.

The ATO said it recognised that some taxpayers might need to take "corrective actions" and gave a deadline of August 1 for targeted businesses to apply for an ABN (Australian Business Number) and to register for the GST.

Uber said it had been consulting with the Tax Office over the past six months and was disappointed the ATO had "taken it upon itself to dictate government policy for the sharing economy".

"Today's decision by the ATO is not a tax on Uber but rather impacts the over 9,000 ordinary Australians who drive on the uberX platform," the company said in a statement.

"These are 9,000 individuals who will now be caught up in red tape before they even accept their first ride and will then be hit with a tax on their very first dollar earned.

"[This is] unlike truck drivers, painters, online sellers, gardeners, other sharing economy participants and every other small business who do not have to collect GST until their business reaches $75,000 per annum in turnover.

"The typical uberX partner in Australia works for around 20 hours a week and takes home around $30,000 per annum, well under the Government's threshold for GST."

Uber's director of public policy Brad Kitschke told AM that the ATO's ruling was a narrow interpretation of the law and failed to take into account the "modernisation of point­ to­ point transport".

"We certainly don't think that Uber partners shouldn't be captured by the taxation system," he explained.

"Our main point is that Uber partners, like the hundreds of thousands of other small and micro businesses, should be subject to exactly the same rules and should be allowed the threshold."

However, the Taxi Council of New South Wales responded that all its members have had to register for, collect and pay GST since the tax was introduced in 2000.

"It continues to amaze me that Uber believe that they're above the law," responded the council's chief executive Roy Wakelin­King. 

"Uber should accept the umpire's decision and comply, that's what everyone would likely expect. "It's fair, it's equitable, it's what everyone else has to do, so why should Uber be treated differently?"

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