The ATO recently released figures on the gap estimates for a number of taxes, including goods and services tax (GST). For GST, the 2015–2016 trends showed a slight increase in the theoretical GST liability estimate. And while compliance levels are quite stable, there are a number of taxpayers who remain under scrutiny. We take a look at who the ATO is watching.
Ride-sharing drivers make up a large portion of what is sometimes referred to as the “platform economy”, or “share economy” and if you are part of this, there are a number of tax obligations you need to understand. For example, if you are an Uber driver you have the same GST liabilities as any other taxi driver. This means regardless of whether you reach the $75,000 income threshold, you are required to register for GST. If you’ve just signed up for a ride-sharing gig, and you already have a GST registration, then speak to us about whether you will need to set up any additional registration.
The ATO is reminding ride-sharing drivers of the importance of complying with the tax laws. Assistant Commissioner, Tom Wheeler, said the ATO is, “still working to educate ride-sourcing drivers, but now focus is shifting to drivers who are ignoring their obligations.”
People earn income from ride-sharing through a range of providers. This enterprise differs from a traditional taxi service because it is run through a facilitator via an app or a website, but it is considered to be taxi-travel for GST purposes. The ATO’s message to you as a taxpayer is that if you have a ride-sourcing enterprise, you must get an ABN and register for GST as soon as you start driving. Of course, you also need to include any income on your tax return.
The ATO’s ability to cross-match data from a range of sources and to make industry comparisons, means there is nowhere to hide. Mr Wheeler warned:
“We are getting data from financial institutions and directly from facilitators, so we know who you are, and we know if you aren’t correctly meeting your obligations.”
If you’ve been ignoring ATO prompts and haven’t applied for ABN and GST registration, the repercussions could be harsh. The ATO will register you for GST and backdate that registration to the date you received your first ride-sharing payment. You will be required to lodge and pay all outstanding tax obligations, including penalties and interest.
Common mistakes for ride-sharing tax disclosure
The ATO has revealed that some of the common mistakes made by taxpayers are:
- not apportioning expenses between private and business use;
- claiming GST credits over the luxury car tax thresholds; and
- claiming for fuel tax credits to which ride-sharing drivers are not entitled.
Taxable fringe benefits for ride-sharing services are also coming under the ATO’s gaze. Employers are now using Uber and other ride-sharing services for employees travel, in lieu of taxis. As Uber drivers are not lawfully required to hold a licence to operate as a taxi, the exemption under of the Fringe Benefits Tax Act, section 58Z cannot apply.
If you provide ride-sharing services or are considering doing so, get in touch with us first for advice on how to meet all of your tax obligations and make the most of your ride-sharing income.