Is Uber (and other ride sharing services) considered to be a taxi according to the Tax Office?….. The answer may surprise you.
In a recent announcement, the ATO has confirmed the the Fringe Benefits Tax exemption for taxi travel does not include ride-sourcing vehicles such as Uber or Lyft. Taxi travel by an employee is an exempt benefit if the travel is a single trip beginning or ending at the employee’s place of work. This exemption is limited to travel undertaken in a vehicle that is licensed to operate as a taxi by the relevant state or territory. It does not extend to travel undertaken in a ride-sourcing vehicle or other vehicle for hire that do not hold such a licence.
However, Uber and other ride-sourcing drivers are taxi drivers who have to register for and pay goods and services tax (GST).
So for Fringe Benefits Tax purposes, Uber (and other ride sharing services) are not considered to be a taxi, but for GST purposes, ride-sourcing drivers are taxi drivers.
And, the ATO are clearly right. And it’s because of how the legislation is drafted. In short:
- In the Fringe Benefits Tax Assessment Act 1986, s58Z provides for certain exemptions for “taxi travel”.
- However, “taxi” is defined in s136 to mean “a motor vehicle that is licensed to operate as a taxi”.
- That is to be distinguished from the A New Tax System (Goods and Services Tax) Act 1999 which at s144.5 requires you to register for GST if you supply “taxi travel”, and merely defines “taxi travel” in s195.1 to mean “travel that involves transporting passengers, by taxi or limousine, for fares”.
- That is, the GST legislation does not define a taxi as limited to those specifically licensed, but FBT legislation does.