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Uber Is Not A Taxi Service for Fringe Benefit Tax purposes

By Heaney Business Group

Good News, the outdated FBT rules for Uber Drivers are set for a legislative change.

Treasury has released an exposure draft under the Treasury Laws Amendment Bill 2019.  It seeks to replace the word “taxi” and change it to read “a car used for taxi travel (other than a limousine)”.

The ATO confirmed that the ruling needed to be more exact and therefore required a change. The ruling in question is that the FBT taxi travel exemption only applies to travel undertaken in vehicles licensed to operate as a taxi. This does not extend to a ride-sharing service who provide vehicles that are not licensed as a taxi.

Just to be clear, this does not directly affect Uber drivers themselves. There are no changes to the GST obligations for Uber drivers.  The 2017 Federal Court case that held that Uber drivers were required to be registered for GST, on the basis that they were supplying taxi travel remains unaltered.

The Institute of Public Accountants general manager of technical policy Tony Greco said the proposed legislative fix would end the “red-tape nightmare” for employers.

“The inconsistent treatment of Uber and other ride-sharing services for FBT and GST purposes has created lots of practical issues for employers,” Mr Greco said.

Ride-sharing services do not qualify as taxi travel for FBT purposes, and therefore, the costs of the services are not exempt from FBT, as the FBT legislation turns on whether the vehicle is licensed to operate as a taxi.

As the ATO could not fix it in an administrative manner, it now needs to be changed via a legislative change

Good News Ahead

The good news is the change will mean there will be one less FBT issue to combat for employers. With the modern world changing so fast these antiquated FBT rules could need a bigger overhaul.

Consultation for the draft bill is currently open until 27 September.

Interested stakeholders can provide their views on the proposed amendments on the Treasury’s website, www.treasury.gov.au

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The team at HBG Tax and Accounting are your local Rockingham Accountants. With extensive experience in all areas of Accounting and Tax.

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HBG Tax and Accounting
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17th September 2019.

The material and content provided in this article is of informative nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.