ATO and Adelaide set to suffer. By Julius Grafton
The magnificent new Adelaide Hospital has formed before our very eyes as we come and go through the lovely Adelaide Convention Centre. We were there last month with ICTECH, our third visit this year. From the loading dock at the center you look straight over to the building site.
We’re talking a building project that has taken years and years and it is still not ready. The builder is trying to wrangle an extra HALF a billion dollars from the Government for delays and variations.
They say it has become the third most expen$ive building in the world. Problems include no provision for patient files as it was supposed to be paper free – yet the software to do that is not ready. Spotless have been on the job for months, charging weekly fees for catering and cleaning services that are not required because the building is not ready.
No one takes responsibility when taxpayer funded works go wrong.
Over at the Australian Tax Office, they see a looming crisis thanks to the ‘sharing economy’, which is bovine excrement. I should know – my lovely bride and I wholesomely embrace AirBnb and Uber. I drive, and we rent our spare room at our palatial inner city terrace to hoards of happy Belgian and Brisvegas visitors..
The crisis is because MOST people are NOT equipped to deal with tax. Uber, Airtasker and AirBnb do not recognize borders. They just sign us up, and we deliver a thing, and they pay us (minus their fee)!
We are paying our tax as we go, easy for us because I just channel the money from the sharing economy into one of our companies as external income. Completely legitimately. It offsets my outrageous drawings, and the GST is automatically calculated.
As I ride Uber, sometimes I talk shop with the driver. They are universally confused about their tax obligations. For its part, Uber keeps them posted with a tax statement that shows them their gross earnings, less its fee. Uber charge a hefty 25% fee to newer drivers, I pay 20% whenever I drive since I went online with them a long time ago when it was technically illegal in NSW.
Every year the tax office gets a feed from Uber and writes to each driver reminding them of their earnings. What happens then I have no idea. But I do see a lot of maybe ‘transient ‘workers, possibly on student or other temporary visas, driving Uber. They are free to depart Australia without settling ANY tax debts.
Uber are fighting a ruling that says all drivers must pay GST on all earnings – even earnings underneath the common GST threshold of $75,000. But while they fight the ruling, they don’t encourage the drivers to pay the GST. This means many drivers will have potentially large GST liability if Uber lose the court challenge.
Meanwhile I still see stacks of adverts for cleaners and drivers with an ABN, evidence that sham contracting is still rife. As many freelance crew and production suppliers know, casual workers must be paid inside the PAYG tax framework, be covered by workers compensation insurance, and have superannuation paid once they earn more than $450 or so.
Sham contracting is where an employer seeks to avoid their obligations by requiring a worker to submit an invoice for services, which is then paid to them exclusive of PAYG tax. It throws the responsibility for tax onto the employee.
Generally a sham contract is one where the employee is paid by the hour. A real contract is seen to be where a service is supplied that is complete, and not tolled by the hour, and where genuine tools are also supplied.
Fair Work Australia has a set of tables and tools for determining who is an independent contractor, and who is an employee.