Is an Uber a Taxi?

Written by: The Institute of Certified bookkeepers

Yes but No!

The Current Law says – No an Uber is NOT a Taxi

ATO position on ride-sourcing and the FBT taxi travel exemption

We recently confirmed our existing view that the taxi travel exemption from FBT does not extend to ride-sourcing vehicles like Uber. Ride-sourcing vehicles do not meet this taxi travel exemption even though the Federal Court in Uber BV v Commissioner of Taxation [2017] FCA 110 confirmed that use of a ride-sourcing vehicle counts as ‘taxi travel’ for GST purposes.

This is because, for FBT purposes, the taxi travel exemption is only available to trips in a ‘taxi’, which the FBT law defines as a ‘motor vehicle that is licensed to operate as a taxi’. Ride-sourcing vehicles do not have such a license. For more information, read the ATO’s FBT Guide for Employers.

Impact of this position on FBT and the use of ride-sourcing vehicles

The taxi travel exemption most commonly arises when an employer provides their employee the use of a taxi for a private purpose (such as a trip home from work when an employee is unwell). If an employer instead offers the use of a ride-sourcing vehicle for these purposes, they may incur a liability for FBT.

However, if an employer pays for their employee to use a ride-sourcing vehicle for work purposes, such as transport between two workplaces, they will not have an FBT liability if the expenditure would be deductible by the employee.

Further, if an employer pays for an employee’s travel in a ride-source vehicle only once or twice a year on an ad hoc basis, and the value of the benefit is less than $300, then such travel may be exempt from FBT as a minor benefit.

New Law as proposed to Parliament says Yes

Treasury has released an exposure draft of a Miscellaneous Amendments Bill for community feedback by 27 September 2019. The exposure draft proposes to make amendments to the Fringe Benefits Tax Assessment Act 1986 in relation to the FBT taxi travel exemption.

According to the draft explanatory memorandum, these amendments propose to replace references to a ‘taxi’ with ‘a car used for taxi travel (other than a limousine)’. It notes that this change is ‘a result of ride sharing providers entering into the market, making it difficult to administer the current meaning of ‘licensed to operate as a taxi’
The term ‘taxi travel’ is proposed to be defined as having the same meaning as in the GST legislation.

So what do we do now?

Current law says you must record uber like trips from work to home separately from taxi trips because the FBT treatment is different.

The consultation on the proposed law change concludes 27 September and will then be considered by Parliament.

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