Taxi wars: GoCatch vs Uber
The taxi wars continue and local player GoCatch points out the differences between it and its pushy cousin, UberX.
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The Australian Taxation Office is looking to clear up how GST applies to new ride sharing services like uberX by July, after numerous complaints from competitors who claim it is being allowed to flout the law with impunity.
Ned Moorfield the chief of taxi booking app GoCatch, has complained to the tax office alleging uberX is evading tax and has warned it will become a powerful monopoly if governments don't either crack down on it or legalise ride sharing.
The ATO told Fairfax Media on Friday, "participation in these new business models varies, and tax obligations and entitlements will reflect this".
The Australian Taxation Office will look into how GST applies to Uber. Photo: David Ramos
"The ATO is examining these business models to better understand the taxation consequences and will provide advice to the community about the goods and services tax liabilities and entitlements involved this financial year," a spokesman said. "This will assist members of the community to be aware and informed of their relevant taxation responsibilities."
Mr Moorfield said he had filed the complaint about a week ago because he claims it was clear from uberX receipts he had seen that they are not charging GST and no ABN number is quoted.
Uber should be deducting the GST before passing on the payment to the uberX drivers, Mr Moorfield argued. But he said it appears it is only employing people who don't have an ABN. In that case, he said it should be collecting the top marginal tax rate of 47.5 per cent from drivers.
GoCatch says that government inacation is creating the next big monopoly in point-to-point transport in Australia. Photo: Graham Tidy
"We have reported them for tax evasion," Mr Moorfield said. "It is amazing to me that Uber is shirking its GST obligations."
Not paying GST is giving uberX drivers an immediate 10 per cent price advantage that competitors who complied with the law don't have, Mr Moorfield said. He said he cannot prove it yet, but it is a cheaper service so it is likely it is reducing GoCatch's customer growth.
Low income exemption
Uber has repeatedly said it "complies with the relevant tax in every territory it operates in". It said uberX drivers typically only work for 20 hours or less a week. This may mean they do not earn enough to be required to charge GST and therefore, pay GST.
Some have pointed to a ruling made by the ATO in 2001, on motorised tricycles taking passengers. It said drivers of these do not have to collect GST from passengers. In part, this was based on their turnover being too low. But it also ruled that the vehicle did not fit the definition of a taxi service in the GST Act, which defines taxi travel as "transporting passengers by taxi or limousine for fares".
However, it may not be strictly relevant. In the ruling it refers to the Macquarie Dictionary definition of taxi as: "a motor car for public hire, especially one fitted with a taximeter".
A spokeswoman for uber said it is talking to all tax authorities worldwide, including the ATO, to help them understand their business model and "how local tax law may or may not apply to our business and our partners. This includes how GST is applied in Australia."
Mr Moorfield also argues that uber's strategy is to ignore the law, pay fines when they are levied and when taken to court employ delaying tactics so that by the time any penalties are imposed it has gained such a large and loyal customer base that it will have seen off competitors.
Mr Hockey reportedly told the conference a friend from the US using an uber car caused him to contemplate how they were going to enforce tax laws in future.
"Government is less powerful today in commerce and enterprise than it ever has been," Mr Hockey said.
'Government inaction'
"These guys are in breach of a law overseen by an agency that reports through to him – it amazes me," Mr Moorfield said.
"The inaction from government is creating the next big monopoly in point-to-point transport in Australia. We're going to end up with another Cabcharge and it is going to be a big, ugly, aggressive culture American company."
Labor's shadow assistant treasurer Andrew Leigh also defended Uber. He said companies like uber and Airbnb wanted to come within current tax and regulatory laws. "They want to be part of the net, they believe they have a better product and they want to be part of the mainstream economy, not the black economy," he said.
Mr Moorfield called on the NSW Government and the Opposition in the lead up to the state election on the weekend to say whether they will legalise uberX or not.
Drivers have been fined in both NSW and Victoria, and the Victorian taxi watchdog is trying to ban the service.
But Mr Moorfield said Uber appears to have deep enough pockets to win the legal battle. If the law is ineffective, he said ride sharing should just be legalised and the expensive vehicle accreditation licence cut. That would allow GoCatch and others to compete with Uber.
"We have someone out there completely disregarding the law. If that's where the government thinks that things should head. Great, but do it quickly. We would certainly consider offering our own [equivalent]."
At its annual general meeting in November 2014, Cabcharge also accused uber of avoiding tax and wrote to the Prime Minister and state and territory leaders calling on them to ban it.
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