If you’re an Uber driver, Delivereasy rider, or other rideshare/food delivery contractor and Airbnb Host you’ll want to pay close attention to some major GST changes coming on April 1, 2024. The new rules will affect how GST is applied and reported for services provided through online platforms like Uber, Delivereasy, Airbnb etc.
The key changes are:
1. Services like ridesharing, food/beverage delivery, and taxable accommodation provided through online marketplaces will be subject to GST, regardless of whether the provider (e.g. Uber driver) is GST registered or not. The platform operator like Uber will be responsible for collecting and remitting the GST to IRD.
2. For GST-registered drivers: The supply between the marketplace operator and a GST-registered property owner or driver will be zero-rated for GST. For instance, if Mark is an Uber and Ola is a GST-registered Driver. If his weekly Income earnings from Uber driving is $1150 and Uber pays $150 to Inland revenue on behalf of Mark. Mark will get $1000 in his bank account. Mark needs to declare $1000 as a Zero-rated GST supply. However, Mark will be still claiming GST on all business expenses that are subject to GST Like fuel, Repair, Licencing, Mobile etc.
3. For non-GST registered providers, the platforms will give a flat rate credit of 8.5% of the fare to account for input taxes the providers pay. The remaining 6.5% GST will go to IRD. This is designed to reflect the average GST amounts claimed by GST-registered taxi/accommodation providers on expenses. So Non-registered individuals will also must report more revenue on their tax submissions as a result of the flat-rate credit
For instance, if Mark was a Not GST-registered Driver. If his weekly Income earnings from Uber driving is $1150 and Uber pays $65(6.5% of net revenue as per flat-rate system) to Inland revenue on behalf of Mark. Mark will get $1085(Net + 8.5% of net revenue as per flat-rate system) in his bank account.
For year-end taxation purposes, So Mark needs to declare $1000 exclusive of GST as an Income in his tax return. he is not GST registered so he is not required to comply with any GST compliance and on behalf of his income online marketplace collects 6.5% GST.
The are no changes to the threshold for GST registration. as soon as you think you’ll earn more than $60,000 in 12 months, you must register for GST
Here is a simplified summary of the key points from the paragraph:
We believe, the two main reasons for the changes are to keep the competition fare among online platforms and traditional businesses and second the government believes that this could generate an income of 47M for Inland revenue.
