Killing off Uber !

The Taxi industry certainly has a fair gripe that every time a customer rides in one of it's cabs the GST is added to the fare, but when private citizens join Uber - which is really a pirate taxi fleet - the fare charged is GST free.

Not any more.  From August 1 the Australian Tax Office has ruled that Uber drivers will be subjected to the GST and they will need to register for the tax and obtain an Australian Business Number ( ABN )  to avoid prosecution.  The full GST will have to be charged on whatever fare applies to the entire journey.

There are predictions that this will immediately cull the numbers joining the Uber fleet and cause many existing drivers to withdraw.  With a mere stroke of the pen the tax office has issued a ruling that will have profound implications for those making the move from what amounted to a tax free hobby - to the ranks of a registered business.

Along with that ABN comes a book keeping liability that is the bane of most business people.  They are required to keep accurate trading records and submit those dreaded "Business Activity Statements " - which come with heavy fines for late submission.  All this is complex and beyond the ability of some traders - who put that in the hands of an accountant and pay a heavy fee for the service.  It is a daunting task for the uninitiated - and the tax office is relentless in demanding total accuracy.

There is also the transition of a few dollars earned onto the public record.  For those receiving any sort of Centrelink benefit there is an obligation to report all earnings and now that information is available within the tax office records by the mere click of a mouse.  Having an ABN will also require any income earned to be included in that persons tax return - and be cross checked within the tax office.

Strangely, Uber drivers are treated differently from other forms of small business.   When the GST came into operation it was deemed impractical to demand tax from each and every small service performed in the community and so a GST exemption of $ 75,000 annual turnover applied.  People who did a bit of gardening or picked up a paint brush to earn a few dollars had no need to lodge a business activity statement or be registered for an ABN.   By issuing a tax ruling, the Australian tax office has decreed that Uber drivers are obliged to charge GST on their first fare and be a fully registered and numbered tax office client from their first day on the job.

It seems to be a clever way of delivering a level playing field.  The traditional cab companies will applaud the imposition of the GST on Uber fares and the public has long accepted that the imposition of a Goods and Services tax applies to the vast majority of purchases.  The fact that it is a disincentive to join Uber ranks is likely to balance the rapid expansion of the Uber concept and stop it driving traditional cab companies out of business.   It is estimated that currently about nine thousand Australians use their cars as taxis within the Uber brand.

Uber has been a problem in most world countries and this Australian tax ruling will be closely followed by foreign tax regimes.   When the full implication sinks in with individual drivers, it is quite possible that it will kill off the Uber concept because the record keeping and public accounting requirements will cause a fatal decrease in those willing to participate.   With a stroke of the pen the tax office has destroyed the anonymity which appealed to most participants !