On Wed 27.9.2017, the Commissioner released TDP2017/2, which is a discussion paper on the definition of ‘taxi’ for the purposes of the FBT Act.
The definition of ‘taxi’ is relevant to FBT for the purposes of 58Z of the FBT Act, which exempts employers from having to pay fringe benefits tax in respect of travel undertaken by their employees in a ‘taxi’ to or from work or elsewhere due to illness of the employee.
The ATO’s current document Fringe benefits tax – a guide for employers states, at 20.2: “The exemption is limited to travel in a vehicle licensed by the relevant State or Territory to operate as a taxi” and as such it does not extend to ride-sourcing services provided in a vehicle that is not so licensed to operate as a taxi.”
However, the Federal Court decided, in Uber B.V. v FCT  FCA 110, that cars operating under the Uber system were ‘taxis’ for the purpose of the provision requiring taxpayers, with a turnover below the $75,000 threshold for registration, still had to register (s144-5 of the GST Act). Also, various States and Territories have, or are proposing to permit or licence Uber drivers (or their cars).
The central question the Paper deals with is whether the Court decision including Uber vehicles as ‘taxis’, for GST purposes, should be adopted for equivalent FBT purposes. Despite it seeming fairly obvious that it should, the Commissioner (a bit coyly) asks the following consultation questions:
22. Consultation Question (1)
- Should a ‘motor vehicle that is licensed to operate as a taxi’ be interpreted to mean a motor vehicle that is statutorily permitted to transport a passenger at his or her direction for the payment of a fare that will often, but not always, be calculated by reference to a taximeter?
- Should the definition of ‘taxi’ in subsection 136(1) of the FBT Act be interpreted to include not just vehicles licensed to provide taxi services, including rank and hail services, but ride-sourcing vehicles and other vehicles for hire?
- If the proposed definition is adopted, the result will be an expansion of the exemption. Are there consequences of taking this approach that we should be aware of?
- Have you identified any issues with the proposed interpretation of ‘taxi’ in its application to other provisions within the FBT Act?
COMMENTS on the Discussion Paper are due by 24 October 2017.
(Note: Taxi’ is also referred to in other parts of the FBT Act. Specifically: section 7, which refers to car benefits; section 8, which refers to exempt car benefits, and section 47, which refers to exempt residual benefits. The ATO does not, however, consider that an interpretation of the definition of ‘taxi’ that includes ride-sourcing vehicles and other vehicles for hire would affect the operation of these sections.)
FBT Act – exemption for certain taxi travel
58Z(1) [Single trip, to or from work]
Any benefit arising from taxi travel by an employee is an exempt benefit if the travel is a single taxi trip beginning or ending at the employee’s place of work.
58Z(2) [Taxi travel due to sickness or injury]
(b) is the whole or a part of the journey directly between any of the following:
(i) the employee’s place of work; or
(ii) the employee’s place of residence; or
(iii) any other place that it is necessary, or appropriate, for the employee to go as a result of the sickness or injury.
FBT Act – definition of ‘taxi’
136 In this Act, unless the contrary intention appears:
taxi – means a motor vehicle that is licensed to operate as a taxi.
GST Act – requirement for ‘taxi’ drivers to register (regardless of turnover)
144-5 Requirement to register
GST Act – definition of ‘taxi travel’
195-1 In this Act, except so far as the contrary intention appears:
taxi travel – means travel that involves transporting passengers, by taxi or limousine, for fares.