Private ruling: GST and taxi travel
Published: May 2015

Ruling: Q1: Are you required to register for GST under section 144-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes.

Relevant facts and circumstances: You have established a business as a R driver. You have an ABN and are registered for GST. You seek clarification as to whether GST registration is compulsory and therefore whether all income for the period and for the future is subject to GST or whether the GST $75,000 turnover threshold is relevant (as you are unlikely to reach the threshold in the next 2-3 years). The R business involves you providing your own private vehicle to collect consumers and transport them to various locations for a pre-determined fare. You, as the driver, do not actively seek the work by touring the streets in the form of a taxi but merely receive a text message from the R control centre and are allocated the job. The consumers contact the R control centre via a mobile application. You are not registered as a taxi driver under any state or federal laws. You seek clarification on whether in accordance with section 144-5 of the GST Act whether you are making supplies within the definition of 'taxi travel' and are therefore subject to the compulsory registration requirements.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 144-5

Reasons for decision: Summary: You are required to register for GST under section 144-5 of the GST Act. | Detailed Reasoning - Detailed reasoning: The type of enterprise you are undertaking is commonly referred to as 'ride-sourcing'. By ride-sourcing, we mean an ongoing arrangement where you (a driver): • make your car available for public hire, where passengers may, for example, use a website or smart phone app provided by a third party (facilitator) to search for and contact you, and • use your car to transport passengers for payment (a fare) with a view to profit. Ride-sourcing arrangements can be enabled by a technology platform maintained by a third party (a facilitator). Typically, a website or mobile device application is used to facilitate a transaction between driver and passenger. For GST purposes, if you provide ride-sourcing services, you are providing 'taxi travel'. This is because you make a car available for public hire and use it to transport passengers for a fare. The existing GST law requires that where you are carrying on an enterprise and providing taxi travel services, then you are required to be registered for GST regardless of your turnover. We consider that you meet these requirements. As you are required to be registered for GST (and are in fact already registered), GST must be calculated on the full fare, not the net amount you receive after deduction of any fees or commissions. For example, if a passenger pays $55 and a facilitator pays you $44 (after deducting an $11 commission), the GST payable is $5 (not $4). GST credits on your business purchases can be claimed, but must be apportioned between business and private use. For example, if you pay $110 for fuel (including $10 GST), and you use your car 10% for ride-sourcing and 90% for private purposes, you may claim a GST credit of $1 for this purchase. The Commissioner has just published a view on ride-sourcing on the ATO website (www.ato.gov.au). Part of the published material mentions the policy taken with regards to the timing of applying this ATO view of ride-sourcing. It states: Recognising the need to allow time for taxpayers to make necessary arrangements the ATO is not intending to apply compliance resources regarding GST obligations for drivers prior to 01 August 2015 except if there is evidence of fraud or other significant matters. You will however need to report the income from your current activities on your income tax return.