# 'Taking an Uber for work? ...Your boss may have to pay tax on it'



## Jack Malarkey (Jan 11, 2016)

http://www.smh.com.au/business/the-...ay-have-to-pay-tax-on-it-20170626-gwyq3v.html

First two paragraphs:

Employers letting their staff use ride-sharing services such as Uber, rather than a licensed taxi, could be liable for fringe benefits tax, the Australian Taxation Office says. That is, unless the law is challenged or changed to state otherwise.

Currently taxi travel by an employee is exempt from fringe benefits tax (FBT) as long as the travel is a single trip beginning or ending at the employee's place of work. The exemption is limited to travel in a vehicle licensed by states and territories as a taxi.

Comment by Jack Malarkey:

This article highlights a problem in the fringe benefits tax (FBT) law.

FBT is a tax imposed on employers for non-salary benefits provided to employees. Many employers then recoup the cost of FBT from the employee.

The effective FBT rate is equal to the top marginal tax rate even if the employee receiving the fringe benefit is on a lower marginal rate of income tax.

The FBT law has an exemption for certain kinds of taxi travel by an employee that is paid for by an employer. The trouble is that the law was enacted before rideshare started and requires the vehicle to be 'licensed to operate as a taxi'. (The relevant definition differs from that in the GST law.)

It may be that a rideshare vehicle is licensed as a taxi even if the vehicle is a taxi within the ordinary meaning of 'taxi'. The Tax Office may end up deciding the exemption is available even under the current law. This interpretation would be available only where rideshare is legal and regulated.

The problem area is not as wide as the article suggests. No FBT liability arises where the employee is using the transport in the course of their work and would have been entitled to deduct the expense if they had incurred it.

The problem arises in cases such as where an employer pays for a trip home late at night where the employee has worked overtime.

This issue doesn't directly affect Uber drivers. The difficulty is that this publicity means that many employers will respond by requiring their employees use taxis rather than rideshare including where no FBT liability would in fact arise.

It's important either that the Tax Office promptly clarify that the current exemption extends to rideshare or that the Parliament legislate to extend the exemption to ensure it does.


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## fields (Jul 11, 2016)

They really are unbelievable! We have to pay GST because we are a taxi according to the ATO but now we are not and employees have to pay fringe benefit tax.


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## UberDriverAU (Nov 4, 2015)

fields said:


> They really are unbelievable! We have to pay GST because we are a taxi according to the ATO but now we are not and employees have to pay fringe benefit tax.


It's the way the law operates. You can be a taxi for one purpose, but not for a different one. Aa another example, someone who's a genuine independent contractor can be deemed to be an employee for super and workers compensation purposes, but will look after their own taxes, will be liable for their own legal liabilities, etc.


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## fields (Jul 11, 2016)

UberDriverAU said:


> It's the way the law operates. You can be a taxi for one purpose, but not for a different one. Aa another example, someone who's a genuine independent contractor can be deemed to be an employee for super and workers compensation purposes, but will look after their own taxes, will be liable for their own legal liabilities, etc.


It is interesting to note the ATO, an organisation I am started to hate more and more, only came out with its ridiculous ruling on fringe benefit taxes after the GST court case.

Now Uber will have to start another court case. This one they should win but it is costing us taxpayers an absolute fortune.


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## Icecool (Feb 8, 2016)

Jack Malarkey said:


> http://www.smh.com.au/business/the-...ay-have-to-pay-tax-on-it-20170626-gwyq3v.html
> 
> First two paragraphs:
> 
> ...


I wouldn't worry about it .why do we have to pay for gst in the first place because we fall in the same meaning as taxes services . Uber can easily challenge this case


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## UberDriverAU (Nov 4, 2015)

fields said:


> It is interesting to note the ATO, an organisation I am started to hate more and more, only came out with its ridiculous ruling on fringe benefit taxes after the GST court case.
> 
> Now Uber will have to start another court case. This one they should win but it is costing us taxpayers an absolute fortune.


If you read the article, they haven't decided how this situation will be handled yet. The whole issue revolves around the following definition in the FBT legislation:


http://www.austlii.edu.au/cgi-bin/sinodisp/au/legis/cth/consol_act/fbtaa1986312/s136.html said:


> *"taxi " *means a motor vehicle that is licensed to operate as a taxi.


Prima facie, this would definitely exclude those who are currently operating illegally because they're not licenced, but it would be hard to argue that the word "taxi" in "operate as a taxi" shouldn't take on the same ordinary meaning as determined in the GST case rather than using state legal definitions.


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## lui6155 (Apr 21, 2016)

UberDriverAU said:


> Prima facie, this would definitely exclude those who are currently operating illegally because they're not licenced, but it would be hard to argue that the word "taxi" in "operate as a taxi" shouldn't take on the same ordinary meaning as determined in the GST case rather than using state legal definitions.


Totally agree UberDriverAU, but in reality the employer will not know if the driver is operating illegally-the onus is on the technology provider vis a vis Uber to ensure compliance. And thats what they are doing at the least in WA (slowly and begrudgingly) by only allowing compliant drivers/vehicle on their platform.

Yes the article may scare off nervous employers from allowing their employees to use ride sharing but it will be minimal imo.


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## UberDriverAU (Nov 4, 2015)

lui6155 said:


> Totally agree UberDriverAU, but in reality the employer will not know if the driver is operating illegally-the onus is on the technology provider vis a vis Uber to ensure compliance. And thats what they are doing at the least in WA (slowly and begrudgingly) by only allowing compliant drivers/vehicle on their platform.
> 
> Yes the article may scare off nervous employers from allowing their employees to use ride sharing but it will be minimal imo.


If the ATO decides that "taxi" does cover licenced Uber vehicles, then I suspect they'll take a reasonable approach and presume that an Uber trip involves a licenced vehicle where it is possible to operate legally, but doesn't involve a licenced vehicle where it isn't possible to operate legally. Given the relatively small amounts involved, I can't see them making compliance too onerous.


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## Icecool (Feb 8, 2016)

UberDriverAU said:


> If the ATO decides that "taxi" does cover licenced Uber vehicles, then I suspect they'll take a reasonable approach and presume that an Uber trip involves a licenced vehicle where it is possible to operate legally, but doesn't involve a licenced vehicle where it isn't possible to operate legally. Given the relatively small amounts involved, I can't see them making compliance too onerous.


If what you saying is right . To be running a taxis service you need to have a licences vehicles but what your Saying is that uber cars are not licenced vehicle therefore not a taxi services . If uber are not a taxi service then we shouldn't have to pay gst as well. If any employer who are worry about this . They should get a private ruling


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## UberDriverAU (Nov 4, 2015)

Icecool said:


> If what you saying is right . To be running a taxis service you need to have a licences vehicles but what your Saying is that uber cars are not licenced vehicle therefore not a taxi services . If uber are not a taxi service then we shouldn't have to pay gst as well. If any employer who are worry about this . They should get a private ruling


I'm not sure what it's like in other states, but in WA if you take passengers for reward you are considered to be a "taxi" (within the meaning of the Taxi Act 1994) unless you're licenced as an omnibus. It's possible to operate an unlicenced taxi because of the wording in the Act, which would see an employer who used such services liable for FBT but the taxi operator would still be liable for GST because the GST legislation doesn't require a taxi to be licenced.


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## Jack Malarkey (Jan 11, 2016)

In a welcome development, the Australian Taxation Office on 29 September 2017 released a consultation paper on the fringe benefits tax definition of 'taxi' for comment by Tuesday 24 October 2017.

See https://www.ato.gov.au/General/Cons...t/Fringe-benefits-tax-and-definition-of-taxi/.

The consultation paper's purpose is to obtain comments as part of developing advice on the application of the fringe benefits tax law. The views in the paper are preliminary and don't represent a Tax Office view or that the Tax Office will take a particular view.

The paper asks some specific questions to guide comments.

The two key paragraphs in the paper are paragraphs 18 and 19:

18. As a result of the Uber decision and the proposed changes to taxi licensing, we consider it is appropriate to review our interpretation of the definition of 'taxi' in the FBT Act and to adopt an interpretation that accepts that a taxi may include a ride-sourcing vehicle or other vehicle for hire.
19. We propose therefore that a 'taxi', as defined in the FBT Act, means a vehicle that is available for hire by the public and is licensed 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.
The Tax Office contact is Anna Longley. Anna's email address is [email protected] and her phone number is (03) 8632 4575.

Written comments need to reach Anna's email address by Tuesday 24 October.


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## Jack Malarkey (Jan 11, 2016)

I have emailed Anna Longley (the Tax Office's contact for the consultation paper) suggesting that they publicise the consultation paper via their Small Business Newsroom (https://www.ato.gov.au/Newsroom/smallbusiness/).

I also propose to send written comments by 24 October supporting the interpretative approach outlined in the paper.


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## Jack Malarkey (Jan 11, 2016)

I have received the following email response from Anna Longley:

Hi Jack,

Thank you for your email and your interest in our consultation on fringe benefits and the definition of ‘taxi’. We are currently preparing a range of communication activities to promote the consultation which will be published shortly. Please feel free to share the consultation with others who may like to contribute in the meantime.

Yours sincerely,

Anna Longley


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## lespaul (May 19, 2017)

UberDriverAU said:


> If you read the article, they haven't decided how this situation will be handled yet. The whole issue revolves around the following definition in the FBT legislation:
> 
> Prima facie, this would definitely exclude those who are currently operating illegally because they're not licenced, but it would be hard to argue that the word "taxi" in "operate as a taxi" shouldn't take on the same ordinary meaning as determined in the GST case rather than using state legal definitions.


Uber drivers are licensed to operate as a taxi, with the exceptions of using taxi ranks and bus lanes. End of story.


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## UberDriverAU (Nov 4, 2015)

lespaul said:


> Uber drivers are licensed to operate as a taxi, with the exceptions of using taxi ranks and bus lanes. End of story.


Apart from your obvious mistake: drivers are not vehicles, "ride share" vehicles are typically not licenced as a "taxi".


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## Jack Malarkey (Jan 11, 2016)

Jack Malarkey said:


> In a welcome development, the Australian Taxation Office on 29 September 2017 released a consultation paper on the fringe benefits tax definition of 'taxi' for comment by Tuesday 24 October 2017.
> 
> See https://www.ato.gov.au/General/Cons...t/Fringe-benefits-tax-and-definition-of-taxi/.
> 
> ...


Just a reminder that any comments on the Tax Office's consultation paper are due by Tuesday 24 October.


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## Jack Malarkey (Jan 11, 2016)

Earlier today (Tuesday 24 October), I submitted the following comments on the Tax Office's consultation paper (https://www.ato.gov.au/General/Cons...t/Fringe-benefits-tax-and-definition-of-taxi/):

I am a rideshare driver in Canberra.

I agree with the approach outlined in the consultation paper.

It achieves a sensible result and is clearly open to the Tax Office having regard to the wording and intent of the provisions, relevant case law, and the regulatory regimes for rideshare now in place.

My answers to the specific questions asked are:

Consultation questions

*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?*

Yes.

Should the definition of 'taxi' in section 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?

Yes.

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?

None of which I am aware.

Have you identified any issues with the proposed interpretation of 'taxi' in its application to other provisions within the FBT Act?

No.

Thank you for the opportunity to comment.

Regards,

Jack Malarkey


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