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?"

Monday, May 18, 2015

Former ACCC boss warns iron ore inquiry risks "political theatre" for "vested interests"

The former chairman of the Australian Competition & Consumer Commission says a parliamentary inquiry into iron ore industry could damage Australia's global reputation as a place to invest.

Graeme Samuel, who led the ACCC between 2003 and 2011, believes politicians need to stay away from what could be "political theatre" and leave it to regulators like the ACCC to do a proper investigation.

Mr Samuel is also worried about external perceptions that the Federal Government could be swayed by vested interests such as those being promoted by the Fortescue Metals chairman Andrew Forrest.

"Competition regulators are best served to be able to investigate allegations of market manipulation which is what's been suggested here and they're the ones that should be dealing with it - not parliaments or politicians," Mr Samuel told AM.

"I think the problem with politicians getting involved is that we get into a political theatre with parliamentary inquiries and we tend to get a confusion then between what is in the public interest and what is in a political interest or serving political purposes.

"That's why you have independent competition regulators like the ACCC, like the European Commission, like the US Department of Justice and other major agencies throughout the world."

Mr Samuel was speaking after the Prime Minister Tony Abbott declared he would support an inquiry into the iron ore industry after an intense campaign led my Mr Forrest.

But Mr Samuel says a parliamentary inquiry has the potential to raise questions about Australian business and how international investors might view government regulation fuelled by vested interests.

"Since the 1990s and the Hilmer competition policy reforms, Australia has been able to properly claim itself as being the leader in free markets, the leader in developing free markets in this country and in resisting the pleadings of vested interests to interfere in free markets," Mr Samuel said.

"What we seem to have here is particular vested interest that want government, who want parliament to intervene in what seems to be a free market.

"Fortunately we had successive treasurers in Paul Keating and Peter Costello who saw through these manipulations and said no, the public interest has to prevail.

"And, let's face it, it's served us so well for various international economic crises, including most recently, the global financial crisis."

The ACCC recently cleared Andrew Forrest of suggesting cartel activity in March when he declared that Fortescue should work with BHP Billiton and Rio Tinto to put a cap on iron ore production to keep prices low.

The current ACCC chairman Rod Sims said Mr Forrest's were "off the cuff" and did not constitute cartel behaviour.

But Graeme Samuel says that decision strengthens the role of regulators like the ACCC to investigate concerns about market manipulation in the iron ore industry.

"It's not for me to question how the ACCC or what it did in relation to its investigations. But you do have the chairman of the ACCC, Rod Sims, coming out publicly and saying that on the analysis of the ACCC there was not evidence of predatory pricing or of collusive behaviour.

"If there are still concerns the ACCC has all the powers under its act to subpoena witnesses, to subpoena documentation and to be able to conduct a thorough independent investigation".