Source: Radio New Zealand
Jomon Perumayan Joseph was caught with a stun gun on the dashboard of his Uber vehicle. NZME
A Supreme Court decision to reject Uber’s appeal against an Employment Court decision that found four of its drivers were employees, not contractors, may raise tricky tax questions, one tax expert says.
Deloitte tax partner Robyn Walker said it would be interesting to see how Inland Revenue responded.
As contractors, Uber drivers had been handling their own tax bills, and could claim expenses such as the cost of fuel against their income.
They also might be registered for GST.
But as an employee rather than a contractor, their employer would be expected to handle all of those things.
“It begs the question as to whether the Supreme Court decision will be followed from a tax perspective. The Supreme Court decision applies for employment law purposes and it doesn’t always automatically follow that the tax answer will be the same, but it will have some influence.
“From a tax perspective it is not possible for employees to claim deductions for the costs associated with earning income. Similarly, employees are not able to be GST registered in respect of the services that they provide their employer.
“To the extent that Inland Revenue concludes the drivers are also employees for tax purposes it will be necessary to determine how to rectify tax positions previously taken and a sensible way forward. All parties involved ought to consider how the tax treatment of the drivers flows through to the amount they are paid, including how they are to be reimbursed for expenses like vehicle running costs.”
Anita Rosentreter, Workers First Union deputy secretary, said the judgement would have implications in future for drivers’ tax expenses and reporting procedures.
“As a union, we think it will become significantly easier, not harder for drivers, and they will get a much better deal overall.
“Uber drivers have to date been responsible for their own tax compliance. Where the contractor system allows expenses to be deducted from taxable income, an employment not only requires those costs to be borne by the employer, but also significantly boosts driver income as drivers enjoy the protection of a wage floor.
“Through the collective bargaining process, we hope to bring clarity to these kinds of issues with Uber as their employer, which will lighten the burden on drivers and demystify what can be an obscure and complicated process.”
She said higher base wages and protections such as a minimum wage, sick and annual leave would be more significant to drivers than the ability to claim expenses.
Inland Revenue said it had no comment to make at this stage.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
