Tax Nerd: Contradictions in tax always mean you pay more!

Contradiction – A combination of statements, ideas, or features which are opposed to one another

The Commissioner of Taxation has shown us his ability to bend and twist in relation to the FBT exemption that applies to taxi travel by an employee beginning or ending at the employee’s place of work.

He states 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. Have a look at this…

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.

The Commissioner says nothing to explain why the term “taxi” in the FBTAA does not include an Uber… However, according to the Commissioner, the term “taxi” in the GST Act does include an Uber so that Uber drivers have to register for GST for their first trip, rather than when their turnover in over $75,000.

Ride-sourcing, sometimes referred to as ride-sharing, is an ongoing arrangement where:

  • you (a driver) make a car available for public hire for passengers
  • a passenger uses a third-party digital platform, such as a website or an app, to request a ride, for example, Uber, Hi Oscar, Shebah, or GoCatch
  • you use the car to transport the passenger for payment (a fare).

Income tax applies to your ride sourcing income. Ride-sourcing is also subject to goods and services tax (GST). All ride-sourcing drivers need to have an Australian business number (ABN) and be registered for GST.

For GST you need:

  • an ABN
  • to register for GST from the day you start, regardless of how much you earn

Would it possibly be that the Commissioner interprets the term “taxi” in two contradictory ways in two different Acts so that they both end up in his favour (he gets more FBT and more GST)?

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12 Responses to Tax Nerd: Contradictions in tax always mean you pay more!

  1. Entropy

    The joys of large bureaucracies with multiple areas making decisions, without appropriate oversight at a higher level. The decision makers of course are very confident of their own abilities and their own worth but have limited real world experience.

  2. Rococo Liberal

    That’s why the meaning of ”employee” is different for SGC, income tax and PAYG. It suits the government and the revenue authorities to use the same word for ease of public understanding, but to use it differently in diferent contexts.

  3. Tim Neilson

    To be fair, the FBT law refers expressly to a vehicle “licensed to operate as a taxi”, whereas the GST law just refers to a “a taxi or limousine” without any reference to licensing, so the ATO is faced with an apparent divergence.
    But as RL has commented that’s because the government decided to play it that way in the legislation.

  4. FelixKruell

    Tim:

    To be fair, the FBT law refers expressly to a vehicle “licensed to operate as a taxi”

    Given many states have now licensed Uber drivers to operate their service (which the ATO says is a taxi service), even under this reference in the FBT Act the ATO is on shaky ground.

    Oh and the courts seem to have favoured the Uber = taxi interpretation, suggesting it’s the ATOs position in relation to FBT that is wrong.

  5. John A

    It’s known as the logical fallacy of equivocation or the Humptry Dumpty case: “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean- neither more nor less.”

    The Tax Office clearly ensures that they snare the equivalent of both-and rather than either-or, thus applying the Sir Frank Gordon theory of taxation: “Grab as much as you can manage to get your hands on.”

    It does not engender much respect for the law or our taxation system.

  6. Terry

    The ATO is just a manifestation of the hegemony that has displaced the freedoms that were once assumed inalienable in our liberal democracy.

    It’s all their money. All Theirs!

    With a stroke of a pen (and quite often without) they can simply bend the rules to their own whims and make criminals of us all.

    Sometimes, they might choose to allow you to keep a little bit, but that is simply a demonstration of their benevolence and generosity. That is, until they come back for you demanding more (and more and more).

    It’s right about now that we should be throwing some tea overboard.

  7. Dr Fred Lenin

    Could be worse, the uniparty could sign us up to join the EU to replace the UK.
    Now that is the home of bureaucracy , the commisars , all political failure who wont leave the trough ,they woukd take the pressure off our pollies who would never have to think again ,Brussels would do it for them .
    At least we would get straight cucumbers .

  8. Nob

    Has the ATO been enlisted on the side of taxi cartels/licence raj in the war against Agile Disruption?

    Having said that, what I heard was that this applies to fixed allowances or company accounts with Uber rather than random receipts submitted?

    I’m probably gonna be disappointed by the answer.

    Like many, my first experience with Uber was when I was in a desperate hurry and no taxis were available.
    Convert ever since.

  9. Craig

    As an Uber driver who is transitioning out of the industry, my advice, don’t bother driving Uber. Poor economical returns after expenses of about $8 an hour. Be better off being a waiter on $17 after tax with super paid (if a FT or PT employee) and don’t have to worry about ridiculous rules set by the ATO and Uber ripping you at the other end at the same time.

  10. Nob

    Craig, much of that is a consequence of authorities treating Uber as a full time job with fixed hours. And effectively putting up disincentives for any competitor to start up.

    Whereas for many at first it was a way to earn a bit of extra with a car that was otherwise sitting idle.

    For the public it’s been a way to finally solve the taxi supply/demand riddle which no taxi company ever addressed seriously, nor any local authority who were happy to take the exorbitant licensing fees.

  11. Jock

    Am in the US at the moment with the kids. Noticed a convention involving hundreds. Not much was on the boards about what it was. Asked a delegate. It was a meeting of Florida tax officers and some IRS. Good eh? It was being held at Disneyworld!! You have to laugh.

  12. Jock

    Update. The happy magical taxers are delegates f r om all the states plus the IRS. Fascinating to see them so happy. Breaking now for lunvh. Wonder if they will tip using cash or card?

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