Uber the loser, Airbnb the winner in new tax office crackdown on digital economy

Updated

Uber is the loser and Airbnb the clear winner in new measures announced today by the Australian Tax Office (ATO), as part of an effort to crackdown on the digital economy.

The ATO has given Uber car drivers two-and-a-half months to start paying goods and services tax (GST), but told Airbnb, an online service that allows people to rent out rooms or apartments privately online, that its status quo will remain.

Airbnb said today's announcement means the 35,000 Airbnb hosts in Australia will not need to register for or collect GST.

"Airbnb welcomes this announcement by the ATO," Sam McDonagh, Australian general manager for Airbnb, said in a statement.

"It's another signal that the sharing economy is here to stay in Australia."

But the ATO said Airbnb hosts still needed to declare any income earned from using the service in their annual tax return, and that to avoid doing so was tax evasion.

"Airbnb proactively advises hosts to declare any income collected as a result of listing their property on our platform," Mr McDonagh said.

The ATO said online agencies were no different from traditional bricks and mortar businesses and warned digital competitors they also needed to pay tax and collect the 10 per cent GST from their customers.

"The existing law applies equally whether the buyer or seller come together at a bricks and mortar business or via a mobile phone app or a website," Deputy Tax Commissioner James O'Halloran said.

Using the example of Uber, Mr O'Halloran said drivers must register for GST, charge GST on full fares, lodge business activity statements, and report all income in their tax returns.

"We understand that people don't often consider the tax consequences of new and emerging business models," Mr O'Halloran said.

"Our first step is to assist taxpayers involved in the sharing economy to meet their tax obligations."

Athan Didaskalou is an Airbnb host in Melbourne. The 29-year-old small business owner earns less than the $75,000 a year tax threshold.

Mr Didaskalou is pleased the Government is taking notice of the sharing economy but is very happy to avoid the red tape of registering for and paying GST.

"I'm happy to avoid the paperwork," he said.

"It's a fantastic way of getting a bit of extra income ... it allows the little guy to earn a little bit of money on the side."

In releasing today's advice, the ATO used the term "collaborative consumption activities" to describe digital players like Uber, Airbnb, certain parking services, and any business offering to provide goods and services to a consumer.

The ATO said it recognised that some taxpayers might need to take "corrective actions" and gave a deadline of August 1 for targeted businesses to apply for an ABN (Australian Business Number) and to register for the GST.

'Uber believe that they're above the law'

Uber said it had been consulting with the Tax Office over the past six months and was disappointed the ATO had "taken it upon itself to dictate government policy for the sharing economy".

General manager of Uber, David Rohrsheim, said the ride-sharing service had been singled out and there needed to be a consistent approach to the sharing economy.

Mr Rohrsheim said it was not clear how the decision would effect the operations of Uber and whether that GST would be applied on each Uber fare or if it meant Uber drivers would have to pay GST as part of a quarterly BAS statement.

He said Uber was taking legal advice and would challenge the ATO decision and that the announcement was disappointing.

"This is not a tax on Uber. This is tax on 9,000 ordinary Australians who've been singled out by the ATO for special treatment in the sharing economy and now are going to be burdened with extra red tape and extra taxes," Mr Rohrsheim said.

He said the decision treated Uber drivers differently to truck drivers, painters, online sellers, gardeners, other sharing economy participants and every other small business who do not have to collect GST until their business reaches $75,000 per annum in turnover.

Earlier, in a statement, Uber said: "The typical uberX partner in Australia works for around 20 hours a week and takes home around $30,000 per annum, well under the Government's threshold for GST."

It's what everyone else has to do, so why should Uber be treated differently? Roy Wakelin-King, Taxi Council of NSW

An Uber driver in Sydney, who preferred to remain anonymous, told the ABC he was already paying GST and the ATO decision would not affect him.

"I think [there's] nothing wrong with that, it's OK, I'm paying GST and tax," he said.

"If I work 3-4 days a week, comes to $2,000, in three months I'm paying GST for $6,000."

The former taxi driver said the main attraction of Uber was improved safety and more flexibility with hours, not more income.

"Taxi is not safe and you don't know who's the person or how they're going to pay, but in Uber they have customers' details, you're not worried about how they're going to pay," he added.

Uber's director of public policy Brad Kitschke said the ATO's ruling was a narrow interpretation of the law and failed to take into account the "modernisation of point-to-point transport".

"We certainly don't think that Uber partners shouldn't be captured by the taxation system," he said.

"Our main point is that Uber partners, like the hundreds of thousands of other small and micro businesses, should be subject to exactly the same rules and should be allowed the threshold."

However, the Taxi Council of New South Wales responded that all its members have had to register for, collect and pay GST since the tax was introduced in 2000.

"It continues to amaze me that Uber believe that they're above the law," council chief executive Roy Wakelin-King said.

"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, so why should Uber be treated differently?"

Follow Peter Ryan on Twitter @peter_f_ryan and on his Main Street blog.

Topics: tax, business-economics-and-finance, computers-and-technology, australia

First posted