The ATO have recently released guidance on the FBT treatment of ride-sharing services such as Uber. The ATO have advised that the current FBT exemption for taxi travel does not extend to ride-sharing services.
Unlike the GST Act which treats Taxi’s and ride-sharing services the same, the FBT Act differentiates ride-sharing services as it is not classed as a vehicle licenced to operate as a taxi. This results in Uber travel being subject to FBT.
However, if the travel is work related it still falls under the FBT rules but qualifies as an exempt benefit. An easy way to look at it is to consider whether the travel would have been deductible to the employee (also known as the otherwise deductible rule). The area where most people overlook is home to work and work to home – this is generally non-deductible and therefore would be subject to FBT. However using a taxi for this kind of travel is exempt.
Travelling between two work locations, or to and from customers and suppliers, would satisfy the otherwise deductible rule. There are also other exemptions offered such as the minor benefits exemption. Therefore you will need to determine the characteristics of each Uber trip to determine its treatment.
As a business the benefits of Uber needs to be weighed up against the benefit of the exemption that you get with taxi travel. Now is a good time to review internal procedures and policies on employee travel. Employers need to ensure employees are aware of the differences to ensure they do not end up with an unexpected FBT liability.
If you would like further information or guidance on choosing the most tax effective method for your business please contact our team on 08 9426 0666.
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