Lyla Lindsey
In Australia, the government levies a Goods and Services Tax (GST) on most goods and services, including taxi fares. Taxi drivers are required by law to register for GST and include it in their fares, regardless of their annual income. This requirement has been in place for decades due to the government's regulation of fixed taxi fares across the country. The GST on taxi fares is typically calculated using the cents per kilometre earnings rate, which measures the average income earned by a taxi over a given distance. However, the specific calculation method may vary depending on the state and the type of taxi service, such as ride-sharing services like Uber, which have different GST implications.
| Characteristics | Values |
|---|---|
| Taxi fares include GST in Australia | Yes |
| Taxi drivers must register for GST | Yes |
| Taxi drivers must report GST | Yes, using one of the following methods: Simpler BAS, or one of the other methods outlined on the Australian Taxation Office website |
| Taxi drivers must keep records for | Five years |
| Taxi drivers must include income and expenses from all business activities on their BAS | Yes |
| Taxi drivers must pay GST on the sale of a taxi licence or plate | No, the sale may be GST-free |
| Cents per kilometre earnings rate | Includes GST |
| FBT exemption for taxi travel | Does not extend to ride-sourcing services provided in a vehicle that is not licensed to operate as a taxi |
| GST on Uber fares | 1/11th of the gross fares plus 1/11th of all other amounts a rider pays for the ride |
| GST on Uber expenses | GST credits can be claimed for the GST on business-related expenses |
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What You'll Learn
Taxi fares include GST
In Australia, taxi fares include GST. The Australian Taxation Office (ATO) requires all taxi drivers to register for GST, regardless of their income. This rule was implemented to address the unfair advantage that smaller taxi businesses had over larger ones due to the $75,000 GST registration threshold.
The ATO considers 'taxi travel' as travel involving the transportation of passengers by taxi or limousine for fares. This definition was established to ensure that ride-sharing services, such as Uber, are treated the same as taxis for GST purposes. As a result, Uber drivers must also register for GST and lodge BAS (Business Activity Statements) to report their GST income and expenses.
Taxi drivers must keep records of their income and expenses, including invoices and receipts, for five years. The cents per kilometre earnings rate can be used to calculate the average income earned by a taxi over a total distance travelled in a year, which includes GST. This rate is useful for comparing performance within the taxi industry and verifying income for tax records.
Additionally, for ride-sharing services, GST is calculated based on gross fares, split fare fees, booking fees, tips, and other amounts received from each passenger. Riders can claim GST credits on these fares if the trip is business-related and they possess a valid tax invoice.
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Taxi drivers must register for GST
In Australia, fares paid to taxi drivers by passengers include the goods and services tax (GST). If you are a taxi driver who is not employed by someone else, you must register for GST, regardless of your income.
Reporting GST
Taxi drivers must report GST using one of the following methods:
- Simpler BAS: Calculate and report G1, 1A, and 1B in your BAS and pay your actual amounts quarterly.
- Pre-determined GST instalment: Pay a quarterly pre-determined GST instalment and report your actual GST information annually. To be eligible, you must have reported actual GST amounts for at least four months and not be in a net refund position.
- Full reporting: Calculate and report all the GST labels in your BAS and pay your actual GST amounts quarterly.
Record-keeping
It is important to maintain proper records of your earnings, including invoices and receipts, for five years. If you do not have proper records, you may need to use the cents per kilometre earnings rate to prepare your BAS. This rate reflects the average income earned by taxis per kilometre travelled in a year and includes GST.
GST-free Transactions
Certain transactions may be GST-free, such as the sale of a taxi licence or plate, or the sale of a business, including taxi plates and licences, if it is sold as a going concern.
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GST on Uber fares
In Australia, taxi drivers are required to register for GST, regardless of their income. This rule was introduced because the government sets fixed taxi fares across the country.
Since the Federal Court's decision in Uber B.V. v FCT [2017] FCA 110, Ubers have been treated the same as taxis for GST purposes. This means that Uber drivers are also required to register for GST and pay GST on their net profits.
The Goods and Services Tax (GST) is a tax of 10% on all goods and services sold in Australia. As an Uber driver, you must give 1/11th of your gross fares to the Australian Taxation Office (ATO) as GST, as well as 1/11th of all other amounts a rider pays for the ride (booking fees, split fare fees, airport fees, etc.). You can then claim back GST credits for the GST included in any business expenses.
It is important to note that Uber does not withhold or file any tax on behalf of its driver-partners. Uber drivers are responsible for reporting and paying any applicable taxes or GST earned from their trips to the ATO. Uber provides tax management assistance and resources to help driver-partners meet their tax obligations, but it is not tax advice. For specific guidance on your tax obligations, it is recommended to consult a tax professional.
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GST on taxi income and expenses
In Australia, taxi fares include GST. Taxi drivers must report GST using one of the following methods: the Simpler BAS method, paying a pre-determined GST instalment amount quarterly, or full reporting.
The Simpler BAS method allows you to calculate and report G1, 1A, and 1B in your business activity statement (BAS) and pay your actual amounts quarterly. This method does not require you to complete the other GST labels. You must include income and expenses from all of your business activities, including taxi driving, on your BAS.
If you choose to pay a pre-determined GST instalment amount quarterly, you need to have reported actual GST amounts for at least four months and cannot be in a net refund position.
Full reporting requires you to calculate and report all the GST labels in your BAS and pay your actual GST amounts quarterly.
It is important to note that reporting annually is not available to taxi drivers.
To correctly report business income and expenses for GST, taxi drivers must keep records, including invoices and receipts, for five years after they were prepared, obtained, or the transaction was completed, whichever is later. These records help verify income and expenses.
The cents per kilometre earnings rate is another tool that can be used to determine income earned by a taxi over a total distance travelled in a year. This rate includes GST but does not consider expenses.
Additionally, the sale of a taxi business, including plates and licences, may be GST-free if it is sold as a going concern, meaning all things necessary to continue operating the business have been supplied.
In contrast, ride-sourcing services like Uber and GoCatch are treated differently for GST purposes and are not exempt from GST.
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GST on Uber income and expenses
In Australia, taxi fares include GST, and taxi drivers must report GST using the Simpler BAS reporting method. The net GST amount is the GST included in all fares minus any input tax credits for the GST included in business purchases.
If you are an Uber driver, the Australian Taxation Office (ATO) considers you to be self-employed. This means you must register for GST and charge GST on all your fares, from the first dollar. You will need to submit a BAS form every quarter. You are also responsible for reporting and paying any applicable GST earned from your trips.
You can claim GST credits on work-related purchases, including the GST Uber charges on their service fees, as well as other parts of the fare you pass on to Uber, such as split fare fees and booking fees. You can also claim GST credits on other Uber-related expenses, such as fuel, mints, stationery, and your mobile phone bill (although some of these need to be apportioned for Uber vs. private use).
As an Uber driver, you can only register for GST once you have started the application process. If possible, you should do this before you start spending money on startup costs, so you can claim back any GST you paid on these expenses.
The income you earn from Uber is assessable income and must be reported in your income tax return. You can also claim deductions for expenses incurred while driving for Uber, including expenses related to holding, maintaining, or operating any assets used to provide ride services.
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Frequently asked questions
Yes, taxi fares in Australia include GST.
Yes, Uber fares in Australia include GST. Uber drivers must register for GST and lodge BAS.
The GST amount for taxi fares in Australia is calculated using the cents per kilometre earnings rate. This rate includes GST and reflects the average income earned by taxis per kilometre travelled in a year.
Yes, you can claim a GST refund on taxi or Uber fares for business-related trips. You will need a valid tax invoice or, if the fare is below $82.50, a docket, invoice, or receipt.
