Operators were told this week they required an Australian Business Number (ABN) to accept payment for ride-sharing services in Australia.
As such payments were in return for services, the tax office said, they would be subject to the GST.
The ATO claims Uber is a ‘taxi-like’ service, and its operators should therefore be subject to the same or similar guidelines faced by taxi owners and drivers.
"The existing law applies equally whether the buyer or seller come together at a bricks and mortar business or via a mobile phone app or a website," Deputy Tax Commissioner James O'Halloran said, speaking with the ABC.
"We understand that people don't often consider the tax consequences of new and emerging business models. Our first step is to assist taxpayers involved in the sharing economy to meet their tax obligations."
Mr O’Halloran said Uber operators (and other online businesses) were required to report income to the ATO and file Business Activity Statements (BAS), along with collecting and paying the GST.
In a statement to the ABC, Uber said the ATO has “taken it upon itself to dictate government policy for the sharing economy", and pointed to other small businesses which were exempt from paying GST when earnings were less than $75,000.
Uber said its operators averaged around $30,000 per year from around 20 hours work per week, and that specific rules should not apply to the ride-sharing economy.
The company added that the ATO had failed to see the economic and environmental benefits that services such as Uber could offer.
Australian Taxi Industry Association (ATIA) chief Blair Davies welcomed the ATO's announcement, saying that there is no reason Uber drivers should be treated any differently to taxi operators, who must register for and pay GST at 1/11th of their gross fare, regardless of earnings.
"The ATO’s decision to make ride-hailing drivers register for GST and pay their fair share of tax, like taxi drivers, closes a loophole that should never have existed in the first place," Mr Davies said.
Uber isn’t the only company in the ATO’s sights, as the office seeks to crack down on online operators who avoid paying GST through loopholes.
The Federal Government announced in the recent 2015/16 Budget that companies such as online video streaming service Netflix would soon be made to pay GST when selling products or services in Australia.
Uber and other online businesses have been given an August 1 deadline by the ATO to apply for ABNs and register for the GST.