The ATO has released a discussion paper on the FBT meaning of "taxi" in light of the Federal Court decision (Uber BV v Federal Commissioner of Taxation [2017] FCA 110) that UberX drivers are required to be registered for GST on the basis that they supply taxi travel.

The taxi travel FBT exemption, which was introduced in 1995, limited exempt travel to taxis to ensure that the travel was provided by an arm's length supplier at commercial rates. The ATO's current position is that the exemption is limited to travel in a vehicle licensed by the relevant state or territory to operate as a taxi. It does not extend to ride-sourcing services provided in a vehicle that is not licensed to operate as a taxi.

However, as a result of the Uber decision and proposed changes to licensing regulations in a number of states and territories, the ATO considers it appropriate to review its interpretation of the definition of "taxi" in the Fringe Benefits Tax Assessment Act 1986 (FBT Assessment Act).

The ATO's discussion paper poses a number of consultation questions, including:

  • 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 FBT definition of "taxi" be interpreted to include not just vehicles licensed to provide taxi services, including rank and hail services, but [also] ride-sourcing vehicles and other vehicles for hire?

The ATO accepted comments on the discussion paper until 24 October 2017.