Concepts
Ride-sourcing
Ride-sourcing is the ATO's term for arranging a paid passenger trip through an app or similar facility, and drivers providing it must register for GST regardless of their turnover.
Ride-sourcing is the term used in GST law and ATO guidance for a service where a driver provides a passenger trip that is booked through an app, website or other facility. Apps that connect riders with drivers are the obvious example, but the definition is about the type of service rather than the brand. The key outcome is that the person driving is treated as providing a taxi travel service for GST purposes, whatever they call themselves.
The consequence is a special registration rule. Most businesses only need to register for GST when their GST turnover reaches $75,000, but a driver who provides taxi travel, including ride-sourcing, must register no matter how small their turnover is. They need an Australian Business Number first and must register for GST at the time they start, which is why it is closely linked with the idea of compulsory GST registration. Even a driver who plans to work only a few shifts has this obligation.
After registration, every ride-sourcing fare is a taxable supply. The passenger pays a price that includes GST, and one-eleventh of that price is the GST amount the driver has to pay over to the ATO. The calculation uses the whole fare including any booking charges that belong to the trip and are collected for the driver, even if the app later deducts a commission before paying out. The commission or service fee is itself a supply to the driver by the platform, and where it includes GST the driver may claim it as a credit.
Because the driver is registered, input tax credits become available for the GST in costs that are used in the enterprise. Fuel, servicing, registration-related business costs where GST applies, cleaning, phone costs and car accessories are typical examples, subject to a business use percentage. For the car itself, the credit is capped through the car limit, a figure that changes and must be checked on ato.gov.au. Always hold tax invoices for purchases above $82.50 including GST.
Ride-sourcing sits alongside the wider sharing economy, and the ATO has paid close attention to the area. Drivers are expected to report GST on the BAS, normally quarterly, and to keep records for five years. They also need to consider income tax, including keeping track of business kilometres for any car expense deduction, and the possibility that they need to pay instalments as their profits grow.
A frequent misconception is that registering for GST is optional until the driver passes the usual threshold. Another is that the driver can leave GST to the platform. In practice each driver runs their own enterprise, so the BAS obligation belongs to the driver. People also sometimes confuse ride-sourcing with a simple car pool where passengers share fuel costs and no fare is charged, which is generally not carrying on an enterprise.
The exact treatment of your arrangements can depend on contracts, how you are paid and other income. This is general information only, so check your own circumstances with the ATO or a registered tax professional.
Worked example
Ben completes ride-sourcing trips with fares totalling $5,500 in a quarter. GST on sales is $5,500 divided by 11, which is $500. His fuel and maintenance cost $1,650 including GST, all for the business, giving a credit of $150. The app charged him $1,100 in service fees including GST, a credit of $100. His BAS shows GST of $500 less $250 in credits, so $250 is payable to the ATO.
Practical tips
- Apply for an ABN and register for GST before accepting your first fare, as the $75,000 threshold does not protect ride-sourcing drivers.
- Ask the platform for periodic tax summaries so you can reconcile fares, fees and GST to your own records before lodging the BAS.
- Do not claim GST credits for the private part of your car use. Keep a record of business kilometres to support the percentage you claim.