Uber has recently introduced American style tipping to their apps.
Tips are tax subsidies in disguise. The tip is from the rider’s taxed income.
Uber should be paying tax on their income They’re trying to avoid this by lower fare rates and insist riders tip the driver directly.
are you… aware that tips are… not a gift but… taxable income in the united states of… america
I meant here in Australia. They don’t attract GST and they generally aren’t assessable income.
I’m still confused as to how this effects Uber’s taxes? They continue to pay tax on the cost of service.
Tips are not a cost of service.
Tips are accessible income.
I agree with you. Why would Uber be tipped? The driver gets tipped. It will be part of driver's accessible income.
Oh but btw, Uber doesn't pay GST, the driver does.
Uber takes a ridiculously large cut for providing the technology, and probably aren't paying any tax in Australia at least.
@SlickMick: Given they lose money from every fare, I'd say the more logical argument is that they aren't taking enough of a cut…
Wait so if it is taxable income, where does the accountability come from? Can't the waiter/tress just pocket it and report nothing?
Exactly, I don't think anyone would report tips to the Govt, especially if paid in Cash :-)
the amount of tips is written in the receipt…
@ssyl9: Is that then reported to the tax office by the restaurant? Is it always written? I know that if I tip here, sometimes it is just cash and not written anywhere
Serving staff can. Uber drivers probably can't.
In my opinion, either tips in cash or none at all.
It is possible tips will tip you (pun intended) over the income test line and you would be sorry you are getting it in the first place.
It is possible tips will tip you (pun intended) over the income test line and you would be sorry you are getting it in the first place
Explain?
@ronnknee: If your Adjusted Tax Income say is $94,316, a tip of $1 or more, will now result in less FTB then if you didn't get it.
Obviously in this example, the loss of FTB is on sliding scale (like 20c in a dollar after $94,316 something).
Certain benefit cuts off once you hit the income limit such as Private Health Insurance rebate where the moment you are $1 above threshold, your subsidy down from 25% to say 17%.
In some circumstances, these days you would rather not earning an extra $1,100 but got whacked with about $4,500 in benefit loss (as an example). This is because certain Non-Profit company allows you to do Salary Sacrifice but your FBT Reportable is declared at double the income (extreme case) which would tip you over the ATI income threshold triggering benefit loss/cut.
That's part of the beauty of progressive taxation system. /S.
@burningrage: +1 because the downvotes are unfair, because most of your info is correct.
That's part of the beauty of progressive taxation system. /S.
That's the bit that's wrong; all of those downsides are precisely in the areas that are not progressive.
You are wrong. I suggest you apologise to OP. Read the bottom paragraph.
Edit: I meant to reply to your other comment RE: Tips being assessed as income. They are.
Ha, the irony. Think you owe haemolysis an apology instead. They're right - it doesn't change how much Uber pays in tax at all out of their income.
@ThithLord: Tips practically aren't assessed as income, because no one in their right mind reports it.
@HighAndDry: That doesn't mean it isn't taxable income - it's just not declared, lmao. But I was referring to the driver whom received the tip - Haemolysis may have been referring to Uber's taxation.
@ThithLord: Yeah no you're absolutely right tips should be reported because they are assessable income.
(and ah I see what you mean - yeah their later comment is wrong. I was wondering what your edit was for.)
Okie dokie, I concede I had made an error. Tips are assessable income, apparently. I failed to fact check. But alas, it’s a bit of a red herring as my post was more of a QUESTION than a statement.
I’m still not seeing where this so-called “tax subsidy” exists? This is what I am questioning and would like to understand please?
Either way, assessable or not: the tip still forms part of a voluntary gratuity which is NOT a cost of service charged by Uber. What tax is that subsidising?
It's a weird way of describing it, but they will presumably think that tip should be paid as part of their wages by Uber, and so properly liable for tax (as plenty of people have mentioned, the amount of tips received isn't necessarily accurately reported to the government).
Don't know why you're being negged. Whether or not tips are taxable, it's not tax paid by Uber - it'd be tax paid by individual drivers.
If people really wanted to support Uber drivers out of sympathy, wouldn't people rather the drivers get $1 out of every $1 instead of only $0.70?
The only tipping I do is the AFL.
Women like tipping
Women like me.
Hate the tipping culture ALA US style - underpay workers and get clients to make up the difference, no thanks!!!!!!
Shame this was Neg'd instead of someone providing a response. The two key points about tipping is that it is uncertain income and can be used as a tool for bullying.
Both valid criticisms definitely. I should have clarified that I was specifically addressing this part:
and get clients to make up the difference
Tipping is honestly better in this respect because it goes directly to the employee without the employer taking a cut.
But you're right: at the cost of less stability and gives potentially too much leverage to unreasonable customers.
@HighAndDry: I think your last sentence covers why I don't like it.
Giving a tip in itself is fine, that's up to the giver, but when it becomes an obligation because everyone "knows" the employee is underpaid then "and get clients to make up the difference, no thanks!!!!!!"
@havebeerbelywillsumo: I don't like tipping and would rather keep Australia tip-free, but I don't think we should be bagging other cultures. It works in US. People provide a good service because their income depends on that service being recognised. If you don't provide a good service, your family goes hungry.
In a way, our tourism industry needs it. Unfortunately, our wages are comparatively high. So we're the land of expensive food and poor service.
@SlickMick: It certainly works for some people, but on the whole, even in the USA its not a success.
Tipping would be fine, if you got paid $15 (or whatever reasonable amount) regardless. So that working with the "minimum effort" ($0 tip) is still enough to pay for your daily expenses…. and that the usual hourly tip amounts are enough to encourage hard workers but not large enough to be affected by corruption. Its a delicate balance, which I don't know can be maintained well.
PS: I know the debates for and against minimum wage as well, I just don't see how the two ideas can work together once "human nature" is involved. And yes, I know the price of electricity, water, food, petrol, goods, services, and housing has gone up tremendously over the past 20 years. So yes maybe $15 is not a reasonable wage, maybe not even $17.70, maybe it should be closer to $30, I do not know exactly it was just an example.
@SlickMick: It does not work in the US… Aside from the fact people are tipped regardless of service quality (maybe not as much, but still tipped), it's incredibly unequal and providing a good service doesn't necessarily make your family not go hungry.
I'm sure an attractive waitress in a swanky Beverley Hills restaurant is thrilled with the tipping culture, what do you think a struggling grandma in a cheap dinner in a poor neighbourhood thinks?
Not to mention that the entire concept is absurd. How on Earth am I meant to have any idea whatsoever how much they are earning and so how much I need to give them to make sure they get a proper wage?
@callum9999: US hasn't gone under, so I'm pretty sure I'm right and you're wrong.
You're thinking way too hard - don't worry about your waitress' bills - she'll look after that. You just find out before you go what the standard rates of tipping are, and when you get good service, giove more than that, when you give bad service, don't.
It's not hard. And it does work - ask someone in the industry.
Tipping is a corporate driven scam. It's a way for the corporation to avoid paying workers a fair wage and rely on the kindness of customers to help supplement the sub minimum wage income of the service provider.
I've been to many countries around the world and only the USA (so far) makes tipping virtually mandatory. I spoke to a former bar tender in Las Vegas and he said his base pay was $2.10 per hour. He relied on tips to survive. Just say no to this scam before it spreads here.
Try tipping in Japan and they'll usually return the money. It's seen as bordering on an insult that you need to bribe workers to do their job properly.
and rely on the kindness of customers to help supplement
Yep, it's almost like trying to guilt-trip their customers
exactly.. this is australia.. tipping is not mandatory, tipping should not be expected.. don’t let it creep in..
It's really not. Once you factor in conversion rates, taxes, and tips then the difference isn't that large in large urban areas.
Restaurant and fast food in the USA wasn't that much cheaper than here, and certainly not one tenth the price.
To give you an example, a burger from https://www.menuwithprice.com/menu/applebees/ is AU$15.50. That's about what you pay for a burger here at a restaurant.
Some parts of the USA add extra taxes, like New York state. 8.875%, so don't forget to include that. That burger is now AU$16.85.
Don't forget that when you tip nothing goes to the people working in the kitchen. The excuse is used 'but Friday nights are so busy so I deserve extra money'. Well, the people cooking the food are busy too and don't get a dime extra.
I'm sure it doesn't apply everywhere, but from my experience tips are often pooled and divided (though not necessarily equally) among all the staff so the cooks and busboys/girls/persons get a cut too.
you don't have to eat at applebees over there. You pick one of a few expensive chains, whereas where do you find something cheaper than that here? Plenty of places in US are well under 1/2 that.
I love visiting US coz I eat Mexican food for nothing like the cost here.
On a recent visit to NYC I was amazed at how expensive it was to go to even a basic chain restaurant. The state tax and tip (which anything less then about 15% is considered an insult) make the prices probably greater then what we pay here.
Maybe a corporation might not survive at all if it had to do everything by the book and pay full wages. But anyway just vote with your feet and walk away.
Uber should comply with all regulations and pay their drivers proper wages so they can live off it without having to work 70 hours a week and carrying all the risk.
What is proper wages in your opinion?
Many uber drivers don't make minimum Australian wage after expenses!
Expenses would vary depending on their car, traffic, the restaurant, amount of orders etc. It's commission based so earnings can vary.
Neither do many other contractors or business owners.
@HighAndDry: There is a big rise of Sham-contracting in Australia, This is were contractors are essentially employees without any benefits because they are on the books as contractors. I believe Spotless got done for it a while ago and was a big case.
Personally I think Uber drivers should be classified as employees but this isn't clear with current laws.
@Krankite: I agree. It's a joke that Uber can say they are not in the transport industry but are merely technology providers. Either they should have to take responsibility for what they're actually doing, or their commission should be dramatically less. But good on them for playing the game well. The name of the game is to have the best lawyers right??
I hear complaints about Uber pay and always wonder why the complainers decided to work for Uber.
When Uber started I don't think anybody was intended to do it as a full-time job.
Bullshit, they knew this was going to happen, they just say that to get around the minimum wage laws.
Tipping is for idiots, i only tip if someone went to extraordinary lengths to help me in a position where they could of done little to nothing, people should not be expected to have to pay for someone to show up and do their actual job that they are getting paid to do.
Agreed. I hate the concept of tipping with a passion. I'd rather pay more upfront straight from the menu. However, when travelling to a country were tipping is mandatory, it needs to be respected.
yeah tipping is fine for other countries but not in Australia where minimum wage is more than what americans etc get paid
yeah I'm talking about you dong the downvoting. I cringe at all the places that I can't admit I'm Australian in case you've been there.
what's uber?
.
get out much?
what's uber?
uber
/ˈuːbə/
combining form
prefix: uber-; prefix: über-
denoting an outstanding or supreme example of a particular kind of person or thing.
"she's a self-proclaimed uberbitch"
to a great or extreme degree.
"an uber-cool bar"
My employer never tips me for doing my regular job or even when I do better so why should others.
That's the point. Your employer doesn't tip, it is the customers/clients that tip.
even the customer's don't tip. They just expect the work to be done as per the agreed standard.
@SlickMick: Many are ready to talk-the-talk but few are ready to walk-the-walk.
It's almost unheard of for employees giving money to their customers and/or managers when a job has been done substandard. Many will outright refuse, even if it is the empirical just thing to do. With that said, the usual scare of getting fired/unemployment is enough motivation for most people to make this a rare occurrence. However, the managers/companies don't have this same motivation so they play by their own rules.
Besides, companies tipping employees for hard work is called a "Yearly Bonus" which isn't an unheard of concept. This practice is normalised in some countries (Central Europe) and has been grounds for corruption. I've had this dangled in my face before like a carrot and it didn't pan out. Why? There's little incentive and accountability for the company and managers. Again they play by their own rules, because the money they usually lose is money borrowed from someone else.
@SlickMick: You won't see a lot of above standard service in the USA either.
Just a a fake personality who will force nice gestures or flirt to guilt you into giving them a bigger tip.
I can ask for my own drink refill, I don't need help from someone who wants a tip.
@samfisher5986: Damn right, I was never blown away by the service in the US. If tipping is expected then most will put in the minimum amount of effort to get that tip.
Uber is an arsehole company. We would have all boycotted it by now if only the Taxi industry wasn't even worse! #YourTaxis
The lack of an alternative such as Uber before was precisely why the Taxi industry was/is so bad.
Maybe…. two wrongs can make a right?
Pretty much how this is turning out - Taxis on one extreme, Uber takes advantage of public discontent to come in at the other extreme.
Honestly how most things work - social ideology, economic theory, politics, etc. Goes from extreme to extreme, and we're lucky to have a little bit where it's in the sane/reasonable middle.
Uber can do and say what they want. Does that bother me? :) Well, yes, I rebel. Just like in supermarkets when they try to "encourage" me to use the self checkout, so that I can increase their profits (for those powerfull few shareholders) at the cost of job loss. I find it satisfying to rebel in any small measure :)
You should watch the latest John Oliver on "Automation" then…
Eugh. I used to watch John Oliver religiously, but then you notice he both takes the cheapest of shots, and also misinterprets his targets to take misleading cheap shots. And then he's just obnoxious.
Despite all the faults with Uber's business model, this is why I can't take its detractors seriously.
Uber should be paying tax on their income They’re trying to avoid this by lower fare rates and insist riders tip the driver directly.
Tipping lets Uber pay less on their income? Pray tell how.
Not sure either but maybe something along these lines
Example -pre tipping Uber receives $110 including $10 GST = net income $100
Post Tipping
Uber driver receives $110 with a $10 tip, fare is now $100 with 9.09 gst = net income is 100.91
Uber has now saved 91cents.
Check your maths:
No tips: Uber receives $110 less $10 GST = $100 income net.
With tips: Uber receives $100 less $9.09 GST = $90.90 income net.
The driver makes more, but the driver isn't Uber.
Uber makes less in the tipping scenario.
Forgot to mention Uber pays driver less due to tips
@Gotchas: If that is the case, Uber's taxable income increases as does their tax bill. (But I haven't read anything about that in the news, have a source?)
@HighAndDry: If you read my first comment properly I was kind of agreeing with just thought of a possible scenario.
So no source
Regarding multinationals taxable income - 😂😂
They normally report 0 or losses
Regarding multinationals taxable income
😂 indeed.
I personally don't mind that much though. Individual income tax is important because most people don't pay much in the way of other taxes. Companies? They create jobs, pay Australians wages, pay Australian suppliers and service providers, pay payroll tax, and if their shareholders are Australian, the income is ultimately taxed then anyway.
@HighAndDry: None of the mentioned paid by Uber. Except for few office staff.
In theory drivers are self employed, so no wage, no payroll tax and no Australian shareholders as stocks are traded in the US
@HighAndDry: No objections. Just commenting on the fact that Uber does not generate the benefits of that you mentioned and are attributed to companies.
On the issue of tipping, I disagree with it. Employees should do their work in the best possible way, not because they are getting additional payments, but because is he ethical thing to do. Employers must remunerate their employees adequately because of the same reason.
Employees should do their work in the best possible way, not because they are getting additional payments, but because is he ethical thing to do
Sure, but this doesn't work in real life. That's why bonuses, performance targets, KPIs, etc all exist. Not to mention "best possible way" is subjective. I bet everyone could work their jobs harder, faster, better, even if just by a little bit. Tips reward not just adequate performance, but performance over-and-above expectations and requirements.
Employers must remunerate their employees adequately because of the same reason.
I agree completely - I don't agree with the concept of tips in place of pay. I think tips should be in addition to adequate pay. But "adequate" pay, in a legal sense, is just the minimum wage. Tips would be in addition to the minimum wage anyway.
@HighAndDry: There is an important difference between tipping and bonus performance targets, KPIs etc, and this is that the way they are remunerated and measured are agreed in advance, and these are paid by the company with your normal pay, attracting the relevant taxes.
I am all in for restaurants, Uber and all other industries where tipping is rampant to implement performance remuneration, but this must be paid by the employer (not a third party) based on agreed indicators and rates.
@MechEng: My mention of performance targets was to refute this:
Employees should do their work in the best possible way, not because they are getting additional payments, but because is he ethical thing to do
Performance targets and tipping are also not mutually exclusive. (And bonuses are very often discretionary and not agreed on beforehand). But you can get bonuses from your company, and also at the same time be tipped by customers.
@HighAndDry: In my view they are still very different. Performance payments do not contradict my statement, because in my view they only happen if the employer views significant value on the performance of the employee, over and above the performance he/she would reasonably expect.
In tipping there is no necessary a value added to the employer. Well I guess that is why the customer pays…
It is confusing but, at a guess - they lower their fares thus they lower their stated business income (yes I understand they also lower their claimable costs ie wages paid) so less income = smaller stated profit = less tax.
That I think was what the OP was saying, whether lower tax paid is actually true when you combine lower profit BUT lower costs I have no idea.
IMHO the tax paid argument is a furphy here anyway - the real problem is paying substandard wages using the excuse that clients will pay extra to make that up. Also that all (low) stated fares are now actually incorrect as they include a hidden obligation to pay more "off the record" so to speak.
UBer as a business was perhaps necessary to give "taxis" competition, this (USA?) business model is not.
Im confused. Why does this subsidise Uber’s taxation? Uber continues to pay GST on cost of service. A tip isn’t the cost of service. It’s entirely optional. Are you saying you find it unfair that when you tip a driver, 10% isn’t going to the government? Are you… aware of what a tip is? It’s a gift.