If an employee is sick or injured and uses a taxi service for subsequent travel to or from work, it is generally exempt from the Fringe Benefits Tax (FBT) under the FBT taxi travel exemption. Here, the question of whether ride sharing services – such as Uber, Ola, and Didi – also qualify for this exemption becomes apparent.
For background, taxi travel by an employee is exempt from FBT if the travel is:
A single trip; and
The travel begins or ends at the employee’s place of work; and
The travel is to or from their residence, or any other place that is necessary or appropriate for the employee to go to as a result of the sickness or injury
Although this question may seem straightforward, it becomes more complex when considering that these ride sharing services meet the definition of a taxi service under GST law, however, they do not meet the definition of a taxi service under FBT law. Under FBT law, a taxi is “a motor vehicle that is licensed to operate as a taxi”.At present, ride sharing services are not licensed to operate as taxis in Australia.
The ATO has recently confirmed that travel in ride sharing services is not exempt from FBT – as the fact that they do not meet the definition of a taxi service under FBT law is more pertinent, as this is an FBT matter.
As such, if an employee travels in the manner stated above using a ride sharing service instead of a registered taxi, and the cost is covered by their employer, then the FBT taxi travel exemption does not apply. As a result, the trip would then trigger an FBT liability for the employer. There are certain exceptions to this rule, however, in the event of employee sickness or injury requiring taxi travel, it is advisable to utilise a licensed taxi service so as to ensure an FBT exemption.
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