Uber Drivers Common Mistakes

had a few clients who have been registered with Uber and a few common issues I've noticed.

1. the income from Uber is subject to GST. The ATO takes the view that Uber is regarded as 'taxi travel services' and therefore should be registered regardless of the turnover. The normal registration threshold is $75k but if providing taxi travel services you need to be registered regardless of turnover. i.e from the first dollar of income. Also means you need to be doing BAS returns. Uber has applied for this decision to be overturned but at present the ATO considers it to be subject to GST.

2. One area to be careful of. Let's say you are a sole trader running a plumbing business with turnover under $75k and you don't register for GST. All good you have the choice not to register. But you also have a vehicle in UBER and so you must register for GST for those UBER services. The problem is you then have the plumbing services ALSO subject to GST. You can't distinguish seperate enterprises when looking at GST registration. It's an all in. So be very careful.

 

@MikeLivingTheDream - is there a distinction if you hold 2 ABNs? ie one for each enterprise or is it a 'related parties' type association?

 

One entity cannot have 2 ABNs I think

 

Sydney

Recommend anyone interested to go to this forum.

 

That all sounds right to me , be interesting to see what gst inputs they could claim.

@Taku Ekanayake ?

 

I'm wondering if AirBnB falls under similar rules? Rent is GST free, but is short term accommodation?

 

From ATO:
GST and property

• Commercial residential premises
  Commercial residential premises include:
  • hotels, motels, inns
  • hostels, boarding houses
  • caravan parks, camping grounds
  • establishments that provide residential premises that are similar to hotels, motels, inns, hostels and boarding houses.
  Commercial accommodation is accommodation in these commercial residential premises.
  
  Some characteristics of commercial residential premises include:
  • multiple occupancy
  • central management
  • providing accommodation to paying guests.

Further down the page....

Leasing your holiday apartment or unit
You make an input-taxed supply if you lease your individual apartment or unit to either:

• a guest
• a management company (that will use it as part of commercial residential premises).

This means you both:

• are not liable for GST on the income
• cannot claim GST credits for anything you purchase or import for the purpose of leasing the premises.

Example: In a commercial residential complex

Aiko owns a strata titled apartment in an apartment complex. When she leases her apartment to Mink Management Services (MMS), the supply is input taxed.

MMS will group Aiko's apartment with other apartments in the complex and let them out in the same manner as a hotel, motel, inn or hostel would.

Even though Aiko's apartment is located within commercial residential premises, her apartment does not, by itself, have the characteristics of commercial residential premises – it is residential.

This means Aiko both:

• is not liable for GST on the lease income
• cannot claim GST credits for anything she purchases or imports for the purpose of leasing the premises.

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I checked the residential page too and it didn't seem to have any useful info on GST application on short term accommodation.

GST and property

So with that all considered, if it's not multiple occupancy it sounds like it won't be subject to GST. And by multiple, I assume that means 2 or more occupancies.

What if I had a local management company manage 2 short term rentals on 1 site for me? Does that then turn that site into commerical? It sounds like it would.

 

Hi Geoff, I just saw a 75k threshold mentioned in your ABC article. That's something for me to follow up...

 

Ta. Still something for me to properly understand. I don't want to be liable for GST if I can help it, perhaps with 2 properties over a financial year its even worth underpricing the rents just to be sure...

 

Hmmm yes... agree... what if one was held in trust and the other in a personal name.... I need proper advice.