# No fringe benefits tax breaks for employers using Uber for staff



## Jack Malarkey (Jan 11, 2016)

ABC Australia:

https://mobile.abc.net.au/news/2019...for-employers-using-uber/11283184?pfmredir=sm
ATO says employers using Uber for staff can't get tax breaks, but those using 'taxis' can

BY BUSINESS REPORTER NASSIM KHADEM

Employers across Australia who have been letting their staff use ride-sharing services such as Uber, rather than a licensed taxi, could be liable for big tax bills, the Australian Taxation Office has confirmed.

Key points:

The ATO says Uber and other ride-sourcing cars are not taxis for the purposes of fringe benefits tax exemptions

But it says Uber and other ride-sourcing drivers are like taxi drivers when it comes to paying goods and services tax

The ATO's decision comes after almost two years of industry consultation, but one tax partner described it as a 'contradiction'

This month the agency declared on its website that while Uber and other ride-sourcing drivers are taxi drivers who have to register for and pay goods and services tax (GST), Uber and other ride-sourcing cars are not taxis for the purposes of fringe benefits tax (FBT) exemptions.

Pilot Partners director of taxation services Murray Howlett said there was a "contradiction at play" in the ATO's decision as it did not leave people feeling that the rules were being evenly applied.

"Uber drivers are being told they are equivalent to a taxi for the purposes of needing to register for and remit GST, but the FBT concessions available for certain taxi travel is denied," he said.

"One cannot help but think that the way our various state governments have capitulated to the ride-sharing industry should be reflected in our federal FBT laws."

Mr Howlett said businesses may be exposed for any decisions they have made in past years to treat Uber or other ride-sourcing travel for staff as equivalent to taxi travel.

Any decisions made in the past are now subject to the stated ATO position. This means that any Uber travel that is caught by FBT because it is not considered taxi travel must now have FBT paid upon it.

"Businesses may need to consider whether denying the reimbursement of Uber fares and only covering taxi travel is preferable in the light of this statement.

"Any businesses who have not paid FBT on Uber fares in recent years will need to review their positions in the light of this ATO statement."

The ATOs decision comes after almost two years of industry consultation.

In September 2017, the ATO released a discussion paper for public consultation on the interpretation of "taxi" for FBT and the taxi travel exemption.

Taxi travel by an employee has long been exempt from FBT as long as the travel is a single trip beginning or ending at the employee's place of work. The exemption has historically been limited to travel in a vehicle licensed by states and territories as a taxi.

But in 2017 the Federal Court held that UberX drivers were required to be registered for GST on the basis that they were supplying taxi travel, cast doubt over that.

The court found in favour of the Tax Commissioner that the ordinary meaning of the word 'taxi' is a "vehicle available for hire by the public and which transports 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".

While the ATO is pleased the court found that definition applies in the case of Uber drivers having to pay GST, an ATO spokesman told ABC News it always believed that FBT taxi travel exemption did not extend to ride-sourcing services.

"We have maintained our ongoing view that the FBT taxi travel exemptions is limited to travel undertaken in a vehicle licensed to operate as a taxi by the relevant state or territory - that is, licensed to provide rank and hail work," the ATO spokesman said.

A spokeswoman for Uber said the company was supportive of efforts by tax authorities and regulators to pursue reforms that reflect the technology changes and innovations in the transport sector.

"Ultimately, we want to see the benefits of ridesharing - from greater reliability, to lower costs and for businesses the ability to redeploy travel spend more effectively - made available to all Australians and all Australian businesses," she said.

[end of article]

Jack Malarkey comments:


For background on this issue, see https://uberpeople.net/threads/taking-an-uber-for-work-your-boss-may-have-to-pay-tax-on-it.178346/.

A different interpretation of the law was reasonably open to the Tax Office.

Its approach is very disappointing.

Legislative amendments to reverse this approach are required as a matter of urgency.


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## Jack Malarkey (Jan 11, 2016)

Here's the full text of the Tax Office's recent statement:

Do you pay for your employees' taxi travel?

3 July 2019

Every time you provide a non-cash benefit to your employees, you need to work out if that benefit attracts fringe benefits tax (FBT). However some benefits may be exempt from FBT, such as taxi travel.

Taxi travel is exempt from FBT where the travel is:

a single trip to or from work, or

due to sickness or injury of the employee for travel between work, home or other place the employee has to go as a result of the sickness or injury.

The exemption only applies to travel in vehicles licenced to operate as a taxi. It does not extend to travel in ride-sourcing vehicles or other vehicles for hire.

Find out about:

Taxi travel expenses exemption: https://www.ato.gov.au/general/frin...d-concessions/taxi-travel-expenses-exemption/

Types of fringe benefits: https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-benefits/

Ride-sourcing: https://www.ato.gov.au/general/the-sharing-economy-and-tax/ride-sourcing/.

(https://www.ato.gov.au/Newsroom/smallbusiness/Employers/Do-you-pay-for-your-employees--taxi-travel-/)


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## UberDriverAU (Nov 4, 2015)

Jack Malarkey said:


> A different interpretation of the law was reasonably open to the Tax Office


The only argument they could have is that "taxi" should not take on it's "ordinary meaning" (as was defined in the GST case ruling) in FBT legislation. It seems a stretch to suggest there can be two ordinary meanings and each applied differently to different legislation as the ATO sees fit.

Clearly these days, an Uber vehicle is licensed as a "vehicle available for hire by the public and which transports 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".


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## Jack Malarkey (Jan 11, 2016)

UberDriverAU said:


> The only argument they could have is that "taxi" should not take on it's "ordinary meaning" (as was defined in the GST case ruling) in FBT legislation. It seems a stretch to suggest there can be two ordinary meanings and each applied differently to different legislation as the ATO sees fit.
> 
> Clearly these days, an Uber vehicle is licensed as a "vehicle available for hire by the public and which transports 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".


Thanks, @UberDriverAU. I completely agree with your analysis.

The Australian Taxation Office's discussion paper of 24 October 2017 also indicated that they were at least contemplating taking a similar interpretative approach: see https://uberpeople.net/threads/taking-an-uber-for-work-your-boss-may-have-to-pay-tax-on-it.178346/.

This discussion paper was still available on the Tax Office website early yesterday but was removed later in the day (no doubt after the controversy in yesterday's media).

The two key paragraphs in the paper were 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'.

[end of quote]

I was one of those who made a submission in response. A copy of my submission is in the earlier thread.

The discussion paper then simply 'died' as far as the world outside the Tax Office was concerned until they slipped out an intended 'under the radar' inconsistent notification on 3 July 2019 without reference to the discussion paper.

This is hardly public administration at its finest.

There may have been some practical administrative challenges at the time of the release of the discussion paper given that rideshare was yet to be legalised and regulated in Victoria. Such difficulty is not apparent now.

Given that the Tax Office has not seen its way clear to adopting a consistent interpretation, legislative amendments are required as a matter of urgency.


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## UberDriverAU (Nov 4, 2015)

Jack Malarkey said:


> This discussion paper was still available on the Tax Office website early yesterday but was removed later in the day (no doubt after the controversy in yesterday's media).


Do you have a link to the page that it was on? With any luck the Wayback Machine will have archived a copy.


Jack Malarkey said:


> There may have been some practical administrative challenges at the time of the release of the discussion paper given that rideshare was yet to be legalised and regulated in Victoria. Such difficulty is not apparent now.


It's quite baffling really. In the GST case they argued state licencing was irrelevant. In WA in particular, the legislation specifically stated that a vehicle used for hire and reward is a "taxi" unless it's licenced as something else. An unlicenced vehicle used for hire and reward fell into that category.

The relevant section of the FBT Act makes no reference to state based legislation at all, so it's hard in my view to argue "taxi" should take on any meaning besides it's ordinary meaning, which our courts (to date) have said includes ride sharing. Prior to law changes Australia wide, there were simply licenced and unlicensed "taxis".


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## Jack Malarkey (Jan 11, 2016)

UberDriverAU said:


> Do you have a link to the page that it was on? With any luck the Wayback Machine will have archived a copy.


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


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## UberDriverAU (Nov 4, 2015)

Jack Malarkey said:


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


Bugger, that one seems to have slipped through the net. Was it a PDF file that you might be able to attach? ?


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## Jack Malarkey (Jan 11, 2016)

UberDriverAU said:


> Bugger, that one seems to have slipped through the net. Was it a PDF file that you might be able to attach? ?


If it was, I don't have a copy.


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## Jack Malarkey (Jan 11, 2016)

If you wish to communicate with the Treasurer to request urgent legislative amendments to extend the present fringe benefits tax exemptions for certain taxi trips to similar trips made by rideshare and other taxi-like vehicles, you can do so via https://treasury.gov.au/the-department/contact-us/ministerial-correspondence.

Be sure to request a reply.


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## Kyanar (Dec 14, 2017)

One note that a lot of people seem to be missing (that is at the bottom of the article) is that the FBT exemption that taxis enjoy and rideshare does not is only applicable to travel that FBT would otherwise have been applicable on - for example sending a sick employee home. It _does not_ apply to directly work related travel such as traveling between two workplaces for work-related purposes - for those, the expense is a deduction and FBT does not apply. This is not changing, and an Uber expense is just as valid as a taxi for this purpose.

The discrimination still needs cleaning up, but the immediate effect of this determination is not as dire as many are making it out to be.


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## UberDriverAU (Nov 4, 2015)

Kyanar said:


> One note that a lot of people seem to be missing (that is at the bottom of the article) is that the FBT exemption that taxis enjoy and rideshare does not is only applicable to travel that FBT would otherwise have been applicable on - for example sending a sick employee home. It _does not_ apply to directly work related travel such as traveling between two workplaces for work-related purposes - for those, the expense is a deduction and FBT does not apply. This is not changing, and an Uber expense is just as valid as a taxi for this purpose.
> 
> The discrimination still needs cleaning up, but the immediate effect of this determination is not as dire as many are making it out to be.


It's not just when an employee is sick or injured:


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## Kyanar (Dec 14, 2017)

UberDriverAU said:


> It's not just when an employee is sick or injured:


As I said - _for example_. It does not apply to _all_ Taxi/Uber travel like some are claiming.


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## UberDriverAU (Nov 4, 2015)

Kyanar said:


> As I said - _for example_. It does not apply to _all_ Taxi/Uber travel like some are claiming.


Who is actually claiming that? ?


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## Jack Malarkey (Jan 11, 2016)

Kyanar said:


> As I said - _for example_. It does not apply to _all_ Taxi/Uber travel like some are claiming.


Agreed. But I suspect there's a risk that some of the staff members who organise this kind of travel for businesses or government agencies (often executive assistants) may not understand the precise circumstances in which fringe benefits tax is payable and decide to use taxis rather than rideshare in all cases.

This risk is particularly high for government agencies. (Government agencies are liable for fringe benefits tax.)


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## Jack Malarkey (Jan 11, 2016)

Jack Malarkey's recent missive to Treasurer Frydenberg is below. I exhort you please to send a similar message using your own words via https://treasury.gov.au/the-department/contact-us/ministerial-correspondence.


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## UberAus (Dec 17, 2016)

Jack Malarkey said:


> ABC Australia:
> 
> https://mobile.abc.net.au/news/2019...for-employers-using-uber/11283184?pfmredir=sm
> ATO says employers using Uber for staff can't get tax breaks, but those using 'taxis' can
> ...


Why should we pay tax (legalised theft)to a government that is counterfeit. Australia is merely a corporation of the Zionist States of America. All the government here is a fake counterfeit govt to a land indebted to the Rothschild's banking cartel. We are enslaved to pay the interest to those fukkers


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## UberDriverAU (Nov 4, 2015)

UberAus said:


> Why should we pay tax (legalised theft)to a government that is counterfeit. Australia is merely a corporation of the Zionist States of America. All the government here is a fake counterfeit govt to a land indebted to the Rothschild's banking cartel. We are enslaved to pay the interest to those fukkers


Thank you for your valuable contribution. ? Just FYI, you get many benefits from the "legalised theft" that we're all subjected to. I bet you can't say the same if you've had something "illegally stolen".


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## Jack Malarkey (Jan 11, 2016)

Letter to the editor by Jack Malarkey published in the Australian Financial Review of Monday 15 July 2019 on page 35:


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## Jack Malarkey (Jan 11, 2016)

SBS News Australia

https://www.sbs.com.au/news/australia-s-struggling-migrant-taxi-drivers-have-been-given-a-lifeline
Extracts:

Taxi drivers fighting to survive the rise of ridesharing have welcomed an Australian Tax Office announcement expected to lift their income.

BY SANDRA FULLOON

...

*Tax relief*

The Australian Tax Office (ATO) has confirmed that this financial year Australian businesses won't have to pay Fringe Benefits Tax (FBT) - a charge on perks for employees - for work-related travel using licensed taxis.

The ATO says the exemption doesn't cover ridesharing, which means businesses are more likely to book a licensed taxi to send staff to a meeting or conference.

It's a small but positive step and we support it," said Bankstown chartered accountant Hamid Saroha.

His business represents more than 1,000 Sydney taxi drivers, and more than 80 per cent of those are migrants.

"It will have an impact on drivers' income, and something is better than nothing," Mr Saroha said.

...

Uber did not respond to a request for comment from Small Business Secrets.

Earlier this month, a spokeswoman for Uber told the ABC the company was disappointed Uber and other ride-sourcing cars would not be classed as taxis for the purposes of FBT exemptions.

"While it is disappointing that the ATO has decided not to proceed with a practical guidance note in this case, we are working closely with the ATO to address this inconsistency," she said.

"Delivering this would ease the burden for Australian taxpayers and level the playing field between a taxi and all rideshare."

[end of extracts]

This story was on the 6.30 pm SBS Television World News broadcast on Saturday 27 July 2019 at about 7.00 pm.

You can watch the video of the news item by using the link at the top of this post.

The story tends to confirm the concern that the circumstances in which fringe benefits tax is payable in the absence of the specific exemptions will be overstated, thereby confusing some employers or their staff into thinking that they had better use taxis rather than rideshare in all cases.

The article quoted above includes the reassuring news that Uber is liaising with the Tax Office about the inconsistency.


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## Ubereater (Dec 25, 2015)

^^ that's a really good news for the drivers !
Now they can choose the type of the pax they want to deal with: if someone prefers drive m40s and corporate types only he/she can drive a cab..
Someone might choose rortshare if driving pukers and cheapskates is his/hers thing.


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