People hoping to make an extra buck on ride-sharing services such as Uber will have to get themselves an ABN (Australian Business Number) and register for GST.
The Australian Taxation Office has classified the services as taxi travel and will force all drivers to register for GST by August 1.
"The existing tax law apples equally whether a buyer and seller come together at a bricks and mortar business or via a mobile phone app or web site," ATO deputy commissioner James O'Halloran said.
"Affected drivers must register for GST, charge GST on the full fare, lodge business activity statements, and report the income in their tax returns."
"We understand that people often don't consider the tax consequences of new and emerging business models. Our first step is to assist taxpayers involved in the sharing economyto meet their tax obligations."
Drivers so far haven't been slugged the 10 per cent charge, meaning fares could rise if Uber passes that cost onto passengers.
Uber hit back at the ATO classification in a blog post, saying it was disappointed in the decision, and would be challenging it.
"The ATO has wrongly chosen to categorise ridesharing as 'taxi travel', which the GST Act defines as 'transporting passengers, by taxi or limousine, for fares'. Ridesharing is not a taxi service," the company said.
"It is a shame that the government is allowing a handful of bureaucrats to determine public policy for the newly emerging sharing economy, when this should really be the role of our elected representatives."
In ATO advice on the sharing economy, the tax office said while Uber drivers must collect GST, people hosting on Airbnb do not need to so as it is regarded as rental income therefore is not subject to GST.
The ATO advice comes less than a month after Uber called for regulation to allow it to operate legally.
"We're happy to pay all of the applicable taxes, and we do already," Uber's Australia and New Zealand general manager David Rohrsheim told the ABC at the time.
A recent funding round valued Uber as a $50 billion company.
This week, the company has reportedly teamed up with Chinese giant Baidu to make a bid for Nokia's Here mapping business.