In 2015 Uber took the ATO to the Federal Court appealing against the ATO’s decision to include ride-sharing as a “taxi service” for the purposes of GST. The effect of this inclusion is quite profound in that those drivers providing ride-sharing services must (like those providing taxi services) register for GST as soon as they start driving (rather than needing to have a turnover of $75 000).
Having registered they:
- Must charge GST on the full fare
- Must provide a tax invoice to a passenger where they request it and the value of the fare is over $82.50 (including GST)
- Are entitled to claim GST on business purchases associated with the travel (such as the car itself, fuel, servicing etc.).
However, these claims must be apportioned to take account of any private usage of the vehicle. With ride-sharing now quite popular, we’ve had several enquiries as to the progress of this Court case. We can inform you that the Federal Court has just recently (17 February 2017) dismissed Uber’s appeal. At least according to the Federal Court, ride-sharing is a type of “taxi service” for GST purposes. Therefore Uber drivers and other drivers involved in the ride-sharing industry must comply with the above requirements. For their part, GST-registered passengers are entitled to claim the GST on work-related fares. Where the fare is below $82.50 (most cases) you will not need a tax invoice to claim GST. Where it exceeds this amount, you should request a tax invoice.
With this matter still possibly subject to another appeal by Uber, at this point it is unknown whether the ATO will seek to recoup GST in prior years from drivers who were not GST registered as they await the outcome of court proceedings. Or indeed whether passengers who are GST-registered can seek to claim GST on prior year fares. The decision also raises many questions affecting bookkeepers directly including the effect on past transactions both from the Uber driver’s perspective and from the myriad of transactions that have been posted into software since Uber arrived on these shores. We expect these will be clarified in the near term and we will keep you up to date with developments.
From 1 July 2017 you will be able to report to the ATO through the Single Touch Payroll (STP). This will become mandatory from 1 July 2018 for clients with 20 or more employers. There is no mandatory deadline for smaller employers at this stage. STP streamlines the way employers report certain taxes and superannuation to the ATO. When employers pay their staff, the employees’ salary/wages will be automatically reported to the ATO. Under STP employers also have the option of paying their PAYG withholding to the ATO at the same time that they pay their staff (this could cause cash-flow issues for employers, and hence is optional).
STP will also:
- See changes to the way superannuation is reported to the ATO. Although there will be no change to the way employers pay superannuation, when payments are made to employees’ funds, the information will be automatically reported to the ATO.
- Employees will also have access to pre-filled forms (via their myGov account) including TFN Declarations, and Superannuation Choice forms when they commence a new job. This is aimed at streamlining the paperwork involved for employers when putting on new workers.
Over the coming months leading up to 1 July, the ATO will be helping employers transition to STP should they wish to do so.
From 1 July 2017 the government has decided to bring in 2 new GST Laws
- GST will apply to overseas parties for digital media (like streaming or downloading movies, games, apps and e-books) and other services such as legal or architectural services imported by Australian consumers who are not registered for GST. What this means is that download and purchase what you can now because as of the 1sts July these services will increase in price.
- From 1 July 2017, non-resident suppliers who sell low value goods to any consumer in Australia will need to charge GST where they meet the $75 000 registration threshold and then remit those GST amounts to the ATO. Currently, goods below $1 000 are exempt from GST. This threshold will be abolished from 1 July and therefore GST will apply irrespective of the price of the goods. These two changes may require non-resident clients to register for GST. The good news is that in the coming months the ATO will have a new facility to allow non-residents to register online with minimal information. More details on how to register via the simplified new facility will be available from April 2017.
If you need any clarification on this please do not hesitate to give me a call on 0415 869 199