Recently, The Australian Tax office (ATO) sent out a reminder to ride-sourcing drivers regarding the importance of adhering to all of their stipulated tax obligations during this tax season.
Focusing in the Right Places
Assistant Commissioner Tom Wheeler stated that the ATO is still working hard to correctly educate ride-sourcing drivers, but for now, the focus would be moving towards drivers who are not fulfilling their obligations at the present moment. “We know that most drivers do the right thing, and we are now focusing attention on the minority of drivers that are not currently meeting their obligations,” he stated.
Wheeler further mentioned, “People earn income from ride-sourcing through a range of providers. While it is different to traditional taxi travel because it is run through a facilitator via an app or a website, ride-sourcing is considered taxi-travel for GST purposes.”
It was also mentioned that tax payers who have any number of ride-sourcing enterprises must ensure that they obtain an Australian Business Number and they also have to register for GST as soon as they start driving in this capacity. Any income that has been derived in this manner also has to be included on a tax return at tax time.
“We Know Who You Are”
Wheeler also mentioned, “We are getting data from financial institutions and directly from facilitators, so we know who you are, and we know if you aren’t correctly meeting your obligations.” He further said that approximately 120,000 ride-sourcing drivers had been contacted by the ATO over the past year and a half in order to inform them about their tax obligations.
It was noted that drivers who had been contacted and who continued to ignore the prompts, apply for an ABN and register for GST for their ride-sourcing businesses, would be registered for GST anyway. In addition, the registration would then be backdated all the way back to the date that they received their first ride-sourcing payment. The drivers in question would then be required to submit and pay all of their outstanding tax obligations, in addition to interest and penalties, which could also – and most likely would – be applied.
Wheeler said drivers should also be made aware of the fact that they are also allowed to claim tax deductions and GST credits in respect of appropriate business expenses. These can include servicing, fuel, phone and data use. “You can claim expenses as long as they are directly related to the running of your ride-sourcing enterprise and you apportion your expenses if they are for both personal and business use,” he said.
It is essential that drivers keep accurate records that will help them stay on top of their tax obligations and requirements. Drivers should also ensure that they claim the correct deductions at tax time.
Points to Keep in Mind
To ensure that ride-sourcing taxpayers do things correctly, they should avoid making the following mistakes:
- Not dividing expenses according to business and private use
- Claiming GST credits that are over the current luxury vehicle tax thresholds – the GST tax credit that is allowed to be claimed is limited to 1/11 of the ‘car limit.’ This amount is currently $57,581
- Claiming fuel tax credits – it is not permitted for ride sourcing drivers to claim these credits
Drivers who would like to find out more about registering for GST, the obligations pertaining to this tax and obtaining an ABN number can contact our office for assistance on ph. 03 9848 5933. This will help them ensure that they are fully compliant with all of the tax obligations pertaining to ride sourcing.