By Jeremy Higgins & Craig Darley
The ATO has recently stated that the cost of travel between an employee’s work and home, if using a ride-sharing service such as Uber and Ola, will not qualify for the Fringe Benefits Tax (FBT) exemption that currently exists for taxi rides.
There has been a long-standing exemption for employers who pay for an employee’s taxi travel for the following:
- any journey beginning or ending at the employee’s place of work; or
- taxi travel as a result of sickness or injury to the employee between the employee’s place of work, place of residence or any other place necessary due to the sickness or injury.
Whilst travel between home and work is generally considered private in nature, an employer has been able to treat a journey meeting this criteria as an exempt benefit. For such exempt benefits, no FBT is payable and the employer may still claim a tax deduction and any GST input-tax credits (if registered).
The ATO has sought to clarify that any reference to taxi travel under this exemption is limited to vehicles licensed by the relevant state or terriroty to operate as a taxi and does not extend to ride-sharing services not licensed as a taxi.
It is worth noting that if an employer pays or reimburses an employee for a trip using a ride-sharing service, even though the statutory exemption for taxi travel does not apply, the minor benefits exemption may still be applied. A minor benefit is a benefit that has a cost of less than $300 (including GST) and is provided infrequently and irregularly.
If an employer pays for work related travel on behalf of an employee, this is still not subject to FBT, whether by taxi or ride-sharing service.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.