Ride-sharing and GST – did you get caught out like me?

As a BAS Agent, it’s very important for me to stay across the GST status of all business expenses so I can properly process my clients’ BAS’s. I would like to think that I am pretty much an expert regarding this aspect of the job as I’ve been doing it for quite a long time. However, recently I realised that I got something wrong! It’s in relation to the service known as “ride-sharing”. I explain my error below.

Ride-sharing or sourcing is an online service that allows users to book drivers to take them to their chosen place of destination. Often, users will share their “ride” with other users who also need to go to the same destination, hence the name. This sounds awfully like booking a taxi doesn’t it? Well the ATO thinks so too and recently ordered all drivers involved with ride-sharing companies to register for GST as is the requirement for all taxi drivers in Australia. This ruling applies from August 1 2015.

When I read about the ATO’s directions re ride-sharing/sourcing, I realised that I had made a mistake re how I had been treating these expenses in my clients’ accounts!

Some of my clients have been using ride-sharing services such as “Uber” (and others) for at least a year now. When I first starting seeing these costs in their accounts, not recognising the supplier names, I asked them what they were and was told they were taxi fares. Being taxi fares, I assumed (big mistake) that they included GST and coded these expenses accordingly. I now know that this was incorrect and I should have coded them without GST. In fact, any of these expenses, up until August 1 2015, should be coded without GST. I really should have paid more attention to the receipts I was given as quite plainly, no GST is mentioned anywhere – see an example below:

So now, I will need to review my clients’ accounts, rectify the incorrect GST coding, and apply adjustments in future BAS’s. What a pain!

Why am I telling you this?

Well, it’s because if I am a trained BAS Agent who has made this error (and should have known better), I’m pretty sure that there will be many less experienced business owners out there who do their own BAS who would have unknowingly done the same thing. I really think that I won’t be the only one who has made this mistake. I have shared my story to alert other business owners, bookkeepers and BAS Agents to this issue.

While in the scheme of things it’s only a minor error and can be easily fixed, I’m not sure that many people would have actually thought about it. I’m pretty sure however, that when the ATO wise up to it, they will remind us all that we need to fix this mistake! ?

PS, if you think you have made the same error as me but don’t know how to fix it, please get in touch with us and we’ll provide some assistance.