UberX drivers supply taxi travel and so must be registered for GST

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Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 A New Tax System (Goods and Services Tax) Act 1999 (‘GST Act’), s 23-10. The word ‘entity’ is roughly equivalent to ‘person’ but includes certain entities without legal personality (GST Act, div 184). The concept of an ‘enterprise’ (defined in GST Act, s 9-20) performs the same function in the Australian GST as the EU VAT concept of an ‘economic activity.’

2 GST Act, ss 23-5 and 23-15 and A New Tax System (Goods and Services Tax) Regulations 1999, regs 23–15.01 and 23–15.02. GST turnover is determined in any month by reference to the previous 12 months’ turnover and the next 12 months’ projected turnover (counting the current month in both periods): GST Act, div 188.

3 GST Act, div 144.

4 Australian Taxation Office, Providing taxi travel services through ride-sourcing and your tax obligations, https://www.ato.gov.au/Business/GST/In-detail/Managing-GST-in-your-business/General-guides/Providing-taxi-travel-services-through-ride-sourcing-and-your-tax-obligations/ (updated 17 February 2017, accessed 10 March 2017).

5 Ibid, p 4 ‘GST consequences in providing ride-sourcing services’. The reference to the activities not being commercial is probably a reference to the fact that activities undertaken by an individual or a partnership consisting mainly of individuals are not considered to be an enterprise if there is no reasonable expectation of a profit from the activities: GST Act, s 9-20(2)(c).

6 Ibid, p 10 ‘Further Information’ states that ‘Compliance measures regarding GST obligations for drivers prior to 1 August 2015 will only be applied if there is evidence of fraud or other significant matters.’

7 http://abr.business.gov.au/SearchByAbnHistory.aspx?abn=76019484900#. The Australian Business Register is a publicly available website listing all past and current Australian Business Numbers and specifying when the holder was or was not registered for GST. It is not possible to say for certain that the linked entry belongs to the Mr Brian Colin Fine referred to in the case but it seems highly likely that they are one and the same.

8 Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998, paras 6.267–6.270.

9 Uber B.V. v Commissioner of Taxation [2017] FCA 110 (‘Uber v FCT’), paras 5–6. Note that the case deals only with UberX drivers and UberX services. It does not consider the treatment of UberTAXI (provided by licenced taxis) or UberBLACK (luxury hire cars).

10 This description of Uber's services is based on Uber v FCT, paras 4–10. The Court notes that the calculations are done on servers located outside Australia. Presumably this means that Uber is neither carrying on an enterprise in Australia nor making supplies in Australia, which would mean that its supplies are not taxable: GST Act, ss 9-5(c) and 9-25 (as in force on the date in question).

11 The Court's analysis of the principles of statutory interpretation is not covered here, since it is their application, rather than their exposition, that will be of most interest to the readers of this journal.

12 GST Act, s 195-1, definition of ‘taxi travel’.

13 See Uber v FCT, para 53.

14 Oddly, the judgment makes no mention of the fact that s 144-1 is a non-operative, explanatory section, which means that it may only be considered for certain specified purposes: GST Act, s 182-10(1)(a) and (2). Note that the phrase ‘taxi operators’ is not defined.

15 Uber v FCT, para 24.

16 Ibid, para 55.

17 Uber v FCT, paras 82–117.

18 The admissibility and relevance of this evidence takes up a significant proportion of the judgment.

19 Uber v FCT, para 123.

20 Ibid, para 127 (footnotes and references within the quoted passage are omitted).

21 Ibid, para 135.

22 Uber v FCT, para 138.

23 Uber v FCT, para 47. Such arguments will be familiar to EU VAT specialists familiar with the need for a consistent EU interpretation of the VAT Directive.

24 Ibid, para 136.

25 Dreamtech International Pty Ltd v Federal Commissioner of Taxation [2010] FCAFC 103; 187 FCR 352.

26 Uber v FCT, para 139.

27 For example, Aslam & Ors v Uber BV & Ors [2016] EW Misc B68. See also Australian Broadcasting Corporation, ‘Uber reaches $130m settlement to keep drivers as contractors in US’, 22 April 2016, http://www.abc.net.au/news/2016-04-22/uber-reaches-24100m-settlement-to-keep-drivers-as-contractors/7351764 (accessed 11 March 2017).

28 FCT v De Luxe Red & Yellow Cabs Co-Operative (Trading) Society Ltd & Ors [1998] 361 FCA. Similarly, bicycle couriers were held to be independent contractors—Vabu Pty Ltd v Commissioner of Taxation (1996) 33 ATR 537—but a later case ruled, in respect of the same courier business, that they were employees: Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21.

29 A small supplier is defined by reference to a turnover threshold of CAD 30,000; higher amounts are prescribed for public service bodies, charities, and public institutions: See Excise Tax Act 1985 (Canada), ss 148 and 148.1.

30 Excise Tax Act 1985, s 241(2) ensures that the registration does not have effect for the other activities. See also Excise Tax Act 1985, s 171.1, which provides for situations where a small supplier who ‘is engaged in a taxi business and other commercial activities in Canada’ becomes or ceases to be registered in respect of those other activities. Excise Tax Act 1985, s 240(3.1) allows ‘extended’ registration on the request of a person who carries on a taxi business and other commercial activities.

31 David Sherman, the esteemed editor of many of Canada's leading GST/HST commentaries, news services, and case notes, is of the view that Uber drivers are not required to register because Uber fares are not regulated. This view is expressed in his report on Uber Canada Inc v Quebec [2016] GSTC 40, a case involving an administrative law challenge to a search warrant executed by Revenue Quebec. The Quebec Superior Court ruled that Uber could not argue that because it was operating outside the law it was not regulated and so was not operating a taxi business. Sherman disagrees, arguing that: ‘The fact that Uber operated in violation of taxi licensing laws should not be a reason for its sales to be taxable. Since Uber operates outside the regulatory system, its fares are not actually “regulated” by the Quebec taxi legislation, and its drivers do not operate a taxi business. The Court should have respected the clear definition in the legislation.’ David Sherman, GST & HST Case Notes (2016, Thomson), Supplement to Canada GST Cases Release No. 234 – May 2016, item 1.