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A legislative fix has been proposed to solve a discrepancy within the current Fringe Benefits Tax Assessment Act that prevents ride-sourcing vehicles from qualifying for FBT exemptions.
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‘Antiquated FBT rules’ set for legislative tweak
10 September 2019
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9 minute read
Last week, Treasury released the exposure draft Treasury Laws Amendment (Measures for a later sitting) Bill 2019: Miscellaneous Amendments, seeking to replace the word “taxi” within the FBT Assessment Act and substitute it with “a card used for taxi travel (other than a limousine)”.
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The change comes after the ATO confirmed its existing view earlier this year, ruling that the FBT taxi travel exemption only applies to travel undertaken in vehicles licensed to operate as a taxi by the relevant state or territory and does not extend to ride-sourcing services provided in a vehicle that is not licensed to operate as a taxi.
This view was reinforced despite a 2017 Federal Court case that held that UberX drivers were required to be registered for GST on the basis that they were supplying taxi travel.
Speaking to Accountants Daily, the Institute of Public Accountants general manager of technical policy Tony Greco said the proposed legislative fix would end the “red-tape nightmare” for employers.
“The inconsistent treatment of Uber and other ride-sharing services for FBT and GST purposes has created lots of practical issues for employers,” Mr Greco said.
“Ride-sharing services do not qualify as taxi travel for FBT purposes, and therefore, the costs of the services are not exempt from FBT, as the FBT legislation turns on whether the vehicle is licensed to operate as a taxi. The ATO could not find an administrative fix, so the absurdity has now been addressed through a legislative change.
“[This means there will be] one less unnecessary FBT issue to combat. FBT already had the unenvious title as the tax with highest compliance burden relative to amount collected, and it did not need more examples being added to the existing long list.
“It’s just an example of the antiquated FBT rules which have not kept pace with a fast-changing modern world.”
Consultation for the draft bill is currently open until 27 September. Interested stakeholders can provide their views on the proposed amendments on the Treasury’s website.
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