Uber outraged by ATO “flawed” decision to have company pay tax like traditional taxis

The ATO has recently issued guidelines to businesses which are part of the sharing economy, advising such enterprises that they were no different from traditional bricks and mortar businesses and so needed to pay tax and collect ten per cent GST if annual turnover was $75,000 or more. 

According to deputy tax commissioner James O’Halloran, the law applies whether an entity is a bricks and mortar business or a mobile phone app or website. Using Uber as an example, O’Halloran claimed that the company was considered to be tagged under “taxi travel” under the GST law regardless of turnover, and therefore drivers must be registered to charge tax.

“We understand that people don’t often consider the tax consequences of new and emerging business models,” O’Halloran said. “Our first step is to assist taxpayers involved in the sharing economy to meet their tax obligations.”

It seems as if Uber really doesn’t like to be put into the same category as the average taxi. It’s not the first time either. The taxi company wracked up fines of $64,000 in US city Eugene. Officials suggested that, as Uber fell under the category of being a public passenger vehicle, it needed such a license.

Of course, Uber declined to pay the fines by claiming it wasn’t really a taxi company.

In this case, Uber has once again argued that it is a “fundamentally different service” from taxis and thus deserves different treatment. It also claimed that the ATO’s decision was a “flawed” one.

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According to Uber it wasn’t pleased by the fact the ATO had taken it upon itself to dictate government policy for the sharing economy by imposing a flawed interpretation of a law that was introduced in the 1990s upon participants of a new business model that is only one year-old.

General manager David Rohrsheim even claimed that Uber had been singled out and there needed to be a consistent approach to the sharing economy. He said this after the ATO suggested Airbnb could remain as is.

The ATO defended the ruling, by suggesting that it planned to create an equal playing field for the taxi industry.

“The tax laws which apply to activities conducted in a conventional manner apply in the same way to activity conducted in the sharing economy,” the ATO said.

Taxi council chief of New South Wales, Roy Wakelin-King, suggested that it “continues to amaze [him] that Uber believe that they’re above the law”. 

Wakelin-King explained that Uber should accept the umpire’s decision and comply, that’s what everyone would likely expect.

“It’s fair, it’s equitable, it’s what everyone else has to do”, he said, so why should Uber be treated differently?

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