Uber loses GST battle with ATO: ordered to pay GST

Uber BV v Commissioner of Taxation [2017] FCA 110 

The Federal Court has held that services provided by an Uber driver providing uberX services constituted a supply of “taxi travel” within the meaning of s 144-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act). The Uber driver was therefore required to be registered for GST.

At the heart of this proceeding is the question of whether persons who are Uber drivers are required to be registered for GST purposes.

Enterprises with a turnover of less than $75,000 do not need to register for GST but there is a special rule or exemption, created by s 144-5 in Pt 45(1) of the GST Act, which has the effect that taxi and limousine operators are required to be registered, regardless of turnover. That provision requires a person who is carrying on an enterprise to be registered for GST purposes “if, in carrying on your enterprise, you supply taxi travel” (s 144-5(1)).

The phrase “taxi travel” is defined in s 195-1 of the GST Act as meaning “travel that involves transporting passengers, by taxi or limousine, for fares”.

The court said that the core issue is whether, in carrying on the enterprise of providing uberX services to passengers (who are known as “uberX riders”), uberX drivers (who are known as “uberX partners”) supply “taxi travel” as defined. If so, they must register for GST purposes.

The parties to the proceedings ultimately agreed that the core issue is encapsulated in the more specific question of whether the applicant is entitled to a declaratory order that he did not supply taxi travel within the meaning of section 144-5(1) of the GST Act.

The applicant submitted that the terms “taxi” and “limousine” should take on their ordinary meaning, supporting a “trade or non-legal technical meaning”. However, the Commissioner submitted that the applicant’s reliance on what it claims are 15 characteristics of a taxi as supporting a “trade or non-legal technical meaning” of “taxi” was misdirected because the States and Territories do not adopt consistent nomenclature and impose requirements and restrictions that differ from jurisdiction to jurisdiction. For example, there are certain taxis where taximeters are not mandated, such as Pt VII of the Transport (Country Taxi-car) Regulations 1982 (WA) and reg 5 of the Country Taxi-Cars (Fares and Charges) Regulations 1991 (WA).

The Commissioner submitted that the applicant’s reliance on a regulatory concept of “taxi” was also misguided because in applying s 144-5 there is no basis for concluding that the Parliament intended the Court to embark on an analysis of the operation of, and difficulties in, the “taxi industry” and the perceived need for “regulatory intervention” in that channel.

The court rejected the applicant’s contention that the meaning of the phrase “taxi travel” was influenced by the “regulatory concept” of taxi. As such, the court declared the uberX services supplied by the driver constituted supply “taxi travel” within the meaning of s 144-5(1) (as defined in s 195-1) of the GST Act. The court also considered that the word “taxi” is sufficiently broad in its ordinary meaning to encompass the uberX service supplied by the applicant.

*original from Tax Institute Australia.

Author: Yianni Tsimopoulos

Yianni Tsimopoulos is passionate and enthusiastic about finance and the advice profession. After having an active personal involvement in the finance industry for several years, he took the opportunity to become the Managing Director of the Nationwide Group of Companies.

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