UberX services constituted a supply of ‘taxi travel’

The Federal Court delivered its decision in Uber B.V. v Commissioner of Taxation, finding the provision of UberX services to passengers constituted a supply of ‘taxi travel’ within the meaning of section 144-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

The ATO has since updated its guidance material on ride-sourcing, reminding drivers they are required to register for goods and services tax (GST) if they carry on an enterprise and provide taxi travel services in that enterprise, regardless of turnover.

GST on low-value imported goods

On 16 February 2017, the Government introduced into Parliament new law (Treasury Laws Amendment (GST Low Value Goods) Bill 2017) that will extend GST to low value imports of physical goods imported by consumers from 1 July 2017. In brief, a vendor registration model will be used and suppliers with an Australian turnover of AUD 75,000 or more in a twelve month period will be required to register and charge GST on goods imported to Australia. The existing processes to collect GST on imports above AUD 1,000 at the border are broadly unchanged. Since the new rules  apply in a little less than four months, affected entities should be considering their obligations and making necessary changes to systems and processes. Refer to TalkTalkInsights for further information.

The ATO has released a draft Law Companion Guide LCG 2017/D2, which is designed as a consultation document (comments close on 24 March 2017) and contains a discussion and examples on how to calculate the GST on low value goods, rules regarding the prevention of double taxation and how the rules deal with other provisions. The ATO will release further guidance on foreign exchange conversion to determine the liable entity and notification requirements and is seeking feedback on all of these issues. The LCG 2017/D2 also contains some welcome guidance on the interaction of these provisions and Australian Consumer Law dealing with GST inclusive pricing.

Draft GST Determination on second-hand goods exclusion

On 22 February 2017, the ATO released Draft GST Determination GSTD 2017/D1, which discusses what is excluded from paragraph (b) of the definition of ‘second-hand goods’ in Division 195 of the GST Act. According to the draft determination, the definition of ‘second-hand goods’ must be read as excluding goods to the extent that they consist of gold, silver, platinum or any other substance which, if it were of the required fineness, and in an investment form, would be precious metal.

To the extent that goods consist of a substance which would be precious metal if of the required fineness and in an investment form, the acquisition of those goods by a second-hand dealer from an unregistered entity is not a creditable acquisition under Division 66 of the GST Act.

The Draft Determination acknowledges that in some cases, apportionment may be necessary. For example, a second-hand dealer may acquire items for a price determined in part by reference to the prevailing spot price of the constituent metal, and in part by reference to the intrinsic value of another component (such as a precious stone in an item of gold jewellery). In such cases, the dealer will need to apportion the consideration paid for the goods between that part of the goods which qualifies as second-hand goods, and that part which is excluded by virtue of paragraph (b), in order to properly calculate their input tax credit entitlement.

When the final Determination is issued, it is proposed to apply from the start of the first tax period commencing after its date of issue, unless the Commissioner considers that taxpayers were involved in fraud, evasion, tax avoidance schemes (whether or not a declaration has been made under section 165-40), or any other artificial or contrived arrangements involving the manipulation of the form or fineness of gold, silver, platinum etcetera. In such cases, the Determination will apply to tax periods both before and after its date of issue.

ATO consulting on various GST issues

The ATO has issued consultation papers on the following GST matters:

• Decision in MBI Properties case impact on GSTR 2006-9

• GST and residential care

• GST and home care

• Issues concerning electronic distribution platforms