Opinion: This is why your tax questions have no simple answers
Make no mistake, writes James Millar, there are no concessions on this and the ATO have made that clear.
Many flying solo members would recall back in 2017 that the ATO appealed to the Federal Court in a dispute against UBER regarding the application of GST to their services. In short the ATO fought tooth and nail to have UBER services caught within the definition of “Taxi Travel” as defined in the GST Act – the result being the ATO could tax all ride sharing services and drivers would not have access to the $75k GST threshold exemption. So with very limited exceptions, if you drive for UBER you basically must register for GST and remit to the ATO. The ATO was successful on appeal and UBER services were considered to be “Taxi Travel”. Fair enough so far.
There are various other sections of tax law that refer to Taxi services and many have big implications for those taxes. One of the big ones being the FBT Act and the FBT exemption on certain taxi travel provided by employers for their employees. It’s a big important free kick and has been around for a while. The problem is that the FBT Act defines Taxi as a “motor vehicle that is licensed to operate as a taxi”.
The ATO were aware of this potential inconsistency when they won the UBER case in 2017 and acknowledged they would prefer to interpret the FBT law consistently in line with the UBER decision for GST.
Fast forward to 2019 and the ATO have recently come out and confirmed that indeed FBT travel for UBER rides is not a taxi service for the purpose of the FBT law and will not be exempt.
In other words they are prepared to dispute the meaning of the word taxi and taxi service and take two completely different positions to their favour. In one case they call it a taxi and in another they do not.
Make no mistake – there are currently no concessions on this and the ATO have made that clear.
This is your tax system at work. This is why when you ask your accountant….”hey can I claim this because logic says yes”….we often reply with…”it depends and we need to review and try and find a way around the issue”.
Clear as mud. Thanks ATO. .