By now, most are aware that the Federal Court ruled that the provision of transport by an Uber driver to an Uber rider is the supply of ‘taxi travel’ for the purposes of the GST Act, therefore requiring Uber drivers to be registered for GST.
The Fringe Benefits Tax (FBT)
Due to the complexities of our tax system, this ruling only applies to the GST Act, so how does the Fringe Benefits Tax Assessment Act apply to Uber travel and why does this matter? If you provide taxi travel to your employees and that travel begins at or ends at your employee’s place of work, or is provided as a result of sickness or injury, section 58Z of the FBT Act exempts the provision of that travel. So, if that travel is not deemed to be ‘taxi travel’, FBT may apply to the provision of that benefit.
Under section 136 of the FBT Act, a ‘taxi’ is defined as a motor vehicle that is licensed to operate as a taxi. Where vehicles used by Uber drivers are not subject to a taxi licensing regime, the travel provided by those vehicles may not qualify for the exemption.
To operate as a ‘taxi’ in Queensland, providers are required to have a taxi service licence. The licence authorises the holder to provide a taxi service in a specific area subject to certain conditions. These licences can only be obtained by buying or leasing an existing Taxi Service License or by tendering for new Taxi Service Licenses if and when they become available through public tender. The license holder, among other criteria, must hold driver authorisation which is also a requirement to be an Uber driver. Furthermore, there are requirements that do not apply to Uber drivers such as not picking up within another Taxi Service Area, displaying a distinctive registration plate and having a taximeter fitted to the vehicle.
The lowdown on FBT
It appears that in Queensland, Uber drivers, whilst requiring driver authorisation and annual safety inspections, are not licensed taxi service providers. Under the current FBT Act, it appears that Uber travel in Queensland may not be eligible for the taxi travel exemption. The state governments legislate taxi service licensing and therefore varying tax treatments among the states may apply.
When determining your liability to Fringe Benefits Tax, you should consider benefits provided by way of Uber travel.