Ride-sourcing and GST

What is ride-sourcing?

Ride-sourcing is an ongoing arrangement where:

  • you (a driver) make a car available for public hire
  • a passenger uses, for example, a website or smart phone app provided by a third party (facilitator) to request a ride
  • you use the car to transport the passenger for payment (a fare) with a view to profit

Ride-sourcing arrangements can be enabled by a technology platform maintained by a third-party facilitator. Typically, a website or mobile device application is used to facilitate a transaction between a driver and a passenger.

Ride-sourcing is one example of collaborative consumption in the sharing economy.

 

GST consequences in providing ride-sourcing services

If you provide ride-sourcing services, you are providing taxi travel services. This is because you make a car available for public hire and use it to transport passengers for a fare.

Under GST law, if you carry on an enterprise and provide taxi travel services in that enterprise, you are required to be registered for GST regardless of your turnover.

 

  • Example 1: GST calculated on full fare

If you are registered or required to be registered, GST must be calculated on the full fare, not the net amount you receive after deducting any fees or commissions.

For example, if a passenger pays $55 and the facilitator pays you $44 (after deducting an $11 commission) the GST payable is $5 (not $4).

 

  • Example 2: GST credits on business purchases

GST credits on your business purchases can be claimed, but must be apportioned between your business and private use.

For example, if you use your car 10% for ride-sourcing and 90% for private purposes, and you:

    • buy a new car to use for your ride-sourcing activity for $33,000 (including $3,000 GST) – you may claim a GST credit of $300
    • pay $110 for fuel (including $10 GST) – you may claim a GST credit of $1
    • pay $220 for a service (including $20 GST) – you may claim a GST credit of $2.

You may be able to claim a proportion of GST credits for other business purchases you make.