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Uber fares to rise on ATO ruling

Taxing times: Ride-sharing services have come under the Australian Taxation Office spotlight as Uber is forced to put up its prices.

Ride-sharing company Uber disagrees with tax office over ABN and GST registration

General News logo10 Aug 2015

UBER fares will rise 10 per cent from this month, after the Australian Taxation Office (ATO) declared that ride-sharing drivers must register for and collect GST on each fare charged from August 1.

The United States-based ride-sharing business disagrees, and has commenced legal proceedings against the ATO, via the Federal Court.

The government’s ruling is based on the fact that it believes Uber drivers supply a taxi service, while the basis of Uber’s legal challenge disputes that fact.

In documents tendered to the Federal Court in New South Wales this week in the name of Uber BV, a Dutch subsidiary of the company, lawyers argue that its “ride-sourcing drivers do not supply taxi travel”, and should therefore be regarded as a micro-business.

A micro-business needs to apply for an Australian Business Number, but does not have to start collecting GST unless it earns more than $75,000 per annum.

The ATO disagrees, declaring that the app-based ride-sharing system constitutes a taxi service. Taxi drivers collect GST on every fare charged, not on a quarterly basis.

Uber Australia/New Zealand general manager David Rohrsheim issued a statement today announcing the price rises and criticising the tax office’s stance.

“To be very clear, Uber believes that all of its driver partners should pay their appropriate share of tax,” he said. “However, we believe driver partners and riders are being unfairly singled out, and so Uber is challenging the ATO’s position in the Federal Court of Australia.” Mr Rohrsheim also said that the action was not a tax on Uber, but rather an additional tax on thousands of Australians who “earn a flexible income by sharing rides on the Uber platform”.

The San Francisco-based company, which calls itself a ‘smartphone app’, relies on owners of private vehicles signing up to its service in return for a share of the fare. It is backed by Google and investment bank Goldman Sachs, and has been valued at US$40 billion ($A54b).

It offers UberX, a low-cost version, along with the mid-priced Uber and premium-priced UberBlack, UberSUV And UberLuxury services in Australia.

Rides are booked via the web or a smartphone app, and generally cost up to 25 per cent less than the equivalent established taxi services.

The application currently operates in nine Australian cites, including Adelaide, Sydney, Perth, Melbourne, Geelong and the Mornington Peninsula.

The use of private vehicles as unlicensed taxis is illegal in NSW, Queensland and Western Australia, and Uber drivers risk fines of up to $1700. The company has told its drivers that it would pay any fines received.

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