In a number of recent speeches (including at our National Convention in March), Treasurer Joe Hockey has told the story of ruminating the tax implications while waving goodbye to a friend from the United States who was headed to the airport in an Uber car. He queried the income tax implications for the driver, the GST implications for the driver and his friend, and how that compares to the situation of a taxi driver. These questions have now been answered by the ATO.
On Wednesday 20 May, the ATO issued a media release and guidance on its website indicating that the tax consequences for Uber drivers were analogous to those for a taxi driver. The ATO guidance also covers a range of other services supplied in the sharing economy and posits that the tax implications vary depending on the type of service provided. The implications of providing a room for rent on Airbnb are stated to be quite different to offering an Uber service because of special rules and carve-outs in the GST Act.
This is an example of our existing tax system playing catch-up with the new economy, and attempting to catch the innovators. As sure as the global economy continues to rapidly evolve and new business models emerge to challenge the traditional, we can expect the ATO to use the tools at their disposal to attempt to catch the innovators. The ATO has done what it can to shed some light on these issues. The broader question of whether the inconsistent treatments that arise for different services under the existing system are desirable as a matter of tax policy remains unanswered.
Thilini Wickramasuriya FTI is a Tax Counsel of The Tax Institute.
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.