There is a strong chance that the ridesharing service Uber will be forced to charge higher fares in Australia following a Federal Court ruling that it must pay GST. Moving forward, Uber drivers will be charged GST like other taxi services, a cost that is almost certain to be passed on to the customer.
Uber had been attempting to dodge its GST obligations on the argument that its drivers earn less than $20,000 per year and therefore should be exempt from the goods and service tax. (Australian businesses that earn less than $75,000 per year do not need to pay GST.)
However, a Federal Court ruling on Friday ruled in favour of the ATO. While the average earnings of Uber drivers were not disputed, the court found that UberX should be classed as a taxi service. Taxi drivers must pay GST regardless of their earnings.
Uber unsuccessfully argued that its employees are not taxi drivers, citing the inability of customers to hail a cab off the street or use a taxi rank. The court dismissed the challenge and ridesharing services are now officially recognised as taxis in Australia.
The upshot of all this is that Uber drivers will now need to pay GST to the ATO with fares likely to increase as a result. Needless to say, the decision has gone down particularly well in the taxi industry.
“UberX drivers cannot expect to be treated as though they operate in a tax free zone. They should pay tax just like their taxi driver counterparts,” said Australian Taxi Industry Association chief executive Blair Davies.
“Taxing [Uber] differently to the equivalent trip in a licensed taxi would be unfair and constitute a regulatory distortion.”
Whether the cost of GST will be partially or fully passed onto passengers remains to be seen. If it’s the latter (which seems likely), you can expect a $40 fare to cost you closer to $45 moving forward.
[Via Business Insider]
Comments
6 responses to “Your Uber Ride Could Soon Cost More Money”
this is *BS* why should the passengers pay for the GST?! we pay GST for the stuff we buy for ourselves…. the food we eat etc. Why should we pay GST for the taxi drivers? thats unfair and then what was the point of having UBER then???? this govt is F’d up…. instead of making things easier for the people of this country they look at ways to make it difficult and hard!
and then they want us to use public transport… and they say Melbourne is the most livable city in the world!! ask the people living here… they will give you the true picture.
Seriously? You do understand that the “S” in GST is for Services – you are receiving a service from the Uber Driver, you need to be taxed for it and they (the driver) are the conduit by which you are taxed.
This is not about paying *their* tax – it is about paying *yours*
You realise that if Uber drivers are required to register for GST, doesn’t mean they pay GST themselves, it means they must charge us GST, collecting on behalf of the government. Same as the GST you pay on all that other stuff (and services) you buy.
OK so if Uber’s are now legally classed as taxi’s… does that mean they can use taxi ranks ,etc? no i think not.
Firstly, Uber already raised fares 10% on 1 August 2015 to comply with ATO, so NO they won’t be raising fares again!
Secondly, I don’t know why all media articles state the “drivers” will have to collect GST ???
The judge actually ruled that UBER was a taxi service provider and that UBER itself would need to collect GST (and issue a tax invoice for the full amount) The drivers only receive 75% so how can they issue a GST invoice for the full amount ???
Because we don’t pay the driver directly. We pay uber. Who then pays drivers.
So let’s say ride is $100, Uber collects $100 +$10gst. Drivers ‘invoice’ uber for $75 +$7.50 gst.
Drivers lodge the $7.50 with the ato
And uber lodge the remaining $2.50 to the ato.
when did this happen, I been paying gst for myself and uber!