By Max Newnham
When the GST system was introduced the income threshold that required a business to compulsorily register was $50,000. This income threshold was later increased to $75,000. In addition to the income threshold, businesses operating in one industry must register for GST, no matter what income they generate, and if a business wants to claim fuel tax credits it also must register for GST.
The industry selected for special treatment is the taxi industry. This means anyone operating within the taxi industry must register for GST, despite them earning only relatively minor amounts that are well below the $75,000 income limit, resulting in them having to pay one-eleventh of the income they earn to the Tax Office.
This means self-employed drivers for Uber, because the service Uber provides is classified as being a taxi service, must register for GST. Drivers thinking that they can escape registering for GST, thus avoiding being involved in the paper warfare associated with the GST system, should think again.
Uber is required to notify the Tax Office of drivers registered with their service, which can result in a please explain letter from the regulator asking why the driver has not registered for GST when it is compulsory.
Q. I am a courier driver who doesn’t own the vehicle I use. I also earn about $52,000 a year. I have an ABN but want to know if I have to register for GST? If I do have to register, can I claim the petrol expenses? If I don’t have to register, but I register anyway, what are the consequences and the benefits for me?
A. From your question it would appear you are operating as a sole trader using an ABN. As your business income is less than the $75,000 income threshold you are not required to register for GST. The ability to claim a tax deduction for petrol used to earn your income does not depend on you being registered for GST.
The ability to claim any expense against income earned, under income tax laws, depends on there being a link between the expense and the income. If you are receiving courier driver income, and are responsible for the petrol costs related to the vehicle you use, you can claim the petrol costs related to the income you earn is a courier driver.
If you were registered for GST you would get the benefit of claiming an input tax credit for the GST included in the petrol expenses, and also claim for input tax credits included in any other business expenses related to earning your income.
If you are using a vehicle owned by the company that you provide courier services to, and not paying a hire fee for the use of the vehicle, you may be classed as not running a business and are an employee. This may not have a major tax impact on you, but if the Tax Office classed you as an employee the business you contract to would be liable for superannuation guarantee contributions and workers’ compensation insurance.
Source: The Age
