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Fringe benefits tax exemption: Ride-share cars are not taxis

Ride-share cars are not taxis for FBT purposes

After almost two years of consultation, the ATO has recently updated its website confirming that ride-sharing services are not taxis for the purposes of the FBT exemption.

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The cost of any taxi travel beginning or ending at an employee’s place of work is exempt from fringe benefits tax (FBT) to the extent the travel is undertaken in a licensed taxi. With the increasing popularity of ride-sharing service, such as Uber, in recent years, employers and the Australian Taxation Office (ATO) have had to consider whether home to work travel in ride sharing services can access this FBT exemption.

During the lengthy public consultation process there were two key perceived unfair inconsistencies commonly noted:

  1. Ride-sharing drivers are considered taxi drivers for GST purposes, it seems contradictory to not allow them to be considered taxi’s for the purposes of the FBT exemption; and
  2. It seems illogical that otherwise identical trips being undertaken in taxis compared to ride share vehicles have different treatments for FBT.

While the ATO attempted to get to a position that the FBT exemption could apply to ride-sharing services, it was concluded that the words of the legislation are clear and legislative reform would be required to incorporate ride-sharing services into the exemption.

To read more of this article, and what the announcement means for your business, please log in to KPMG Tax Now.

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