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Uber BV v The Commissioner of Taxation

Last Friday, the Federal Court held that services supplied under the uberX service constitute “taxi travel” within the meaning of s 144-5 (1) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth).


To give context to this dispute, following the rise in popularity of the ride sharing platform the Australian Taxation Office (ATO) announced in 2015 that Uber drivers will have to register and pay GST, regardless of turnover. The general rule regarding registration is that an enterprise with a turnover of less than $75,000 is not required to register for GST. An exception to this rule is Section 144-5(1) which requires a person who is carrying on an enterprise of supplying ‘taxi travel’ to be registered for GST regardless of turnover. Section 195-1 of the GST Act goes on to define ‘taxi travel’ as ‘travel that involves transporting passenger, by taxi or limousine, for fares’.


The Australian Taxation Office (ATO) took the position that the Uber platform fell within this exception. However Uber disagreed with this position and sought a declaration from the Federal Court that the services provided by UberX drivers did not constitute taxi travel.


Applicant Submissions:

The applicant made submissions on the construction of ‘taxi travel’ claiming:


  • ‘Taxi Travel’ was intended to apply only to the taxi industry as the legislature did not seek to deal with this issue in any other industry.

  • The statutory context suggests that the words “taxi” and “limousine” bear a trade or non-legal meaning. Alternatively the ordinary meaning of the words “taxi” and “limousine” was heavily influenced by the underlying regulatory regime.
  • The disjunctive “taxi or limousine” in the definition of s195-1 provides that “taxi” and “limousine” have different meanings.


Using the above mentioned arguments on statutory construction, the applicant put forward factual arguments distinguishing Uber from Taxis. The applicant contended that Uber services did not display the essential operational features of a taxi, on the basis that Uber vehicles do not show markings, the access is limited to Uber licensees (App Users), payment systems and calculations differ and Uber drivers are not required to display a fare meter.


Respondent Submissions:

The respondent’s made submissions that:


  • “Taxi travel” is to be construed as a whole and connotes the transport, by a person driving a private vehicle, for a fare irrespective of whether the fare is calculated by reference to a taximeter.

  • The services supplied by Uber demonstrate the essential features of transport “by taxi” and “by limousine”.
  • The applicant incorrectly relied on the regulatory regimes applying to the taxi industry.


The Commissioner in support of its submission on the construction of ‘taxi travel’ used dictionary definitions to help identify the key features of a ‘taxi’ in ordinary understanding.


Furthermore the Commissioner made submissions that the difference between a limousine and a taxi was that a limousine is not calculated by reference to a taximeter and will need to be pre-booked. Therefore, “limousine” could apply to any hire car.



Justice Griffiths “accepted the Commissioner’s submission that the word “taxi” is a vehicle available for hire by the public and which transports a passenger at his or her direction for the payment of a fare that will often, but not always, be calculated by reference to a taximeter”. In reaching this decision, consideration was placed on principles of statutory interpretation. Further to this the dictionary definitions the Commissioner relied upon provided the court with a supporting context of this interpretation.


However, Griffiths J rejected the Commissioner’s position that limousine was not confined to luxury cars. Instead the ordinary meaning of limousine “was a private luxurious motor vehicle which is made available for public hire and which transports a passenger at his or her direction for the payment of a fare”. Although the present matter involved a Honda Civic which did not meet this definition, Griffiths J recognised this position may be different in cases of other UberX drivers who do use luxury cars.

Ultimately this decision will impose huge compliance burdens on Uber and its drivers. Particularly Uber drivers will now have to register both an Australian Business Number and register for GST, charge an additional 10%, lodge Business Activity Statements and claim Input Tax Credits.


With this being another win for the Commissioner, it can be expected that there will be a crackdown in tax compliance within the ride sharing industry. 

Co-authored with Ben Caratti

Posted in: Tax & ATO News Australia at 09 March 17

The GST Issue With Uber

The ATO recently announced their view that popular ride-sharing facility Uber is a taxi service for GST purposes. For those who are unaware, Uber is a platform by which private individuals can register and make their own vehicles available to the public, drive passengers to their desired location for a commercial fare, all via a simple smartphone application. While it has enjoyed phenomenal success and is available in 200 cities across 55 countries, this GST ruling is only the latest development in a long list of regulatory hurdles faced by the company.

Typically, businesses with a GST turnover of less than $75,000 are not required to be registered for GST. However, the exception to this rule is found in s 144-5 of the GST Act, which states that if you provide “taxi services” as part of an enterprise, you are required to be registered for GST, regardless of turnover. The ATO identifies three key points underpinning this approach:

First, it avoids the confusion that would arise if some taxis had to charge GST, and some did not;
Second, to avoid the issue of a passenger using a taxi on a business trip, which is a creditable acquisition for GST purposes, and wanting to claim an input tax credit against the GST included in the fare, but potentially being prevented from doing so; and
Third, the state authorities regulating traditional taxi services adjusted all meters to reflect GST after 1 July 2000. If only some drivers were registered for GST but all drivers collected this higher rate, it would disadvantage drivers who had to be registered under the ordinary $75,000 threshold but provided the same service.
This extends to taxi drivers, chauffeur-driven limousines, hire cars, and, now, Uber drivers. This means charging GST, lodging Business Activity Statements, and claiming Input Tax Credits for transactions entered into while providing “taxi services”.

While the object of the section is arguably to promote uniformity in the industry, the decision that Uber is part of this industry suddenly presents a huge compliance burden that did not previously exist for the company and its drivers. The company has since argued it is being unfairly targeted, and to find out whether this is the case, it is necessary to have regard to what precisely it is that the ATO considers a ‘taxi service’.

Guidance can be drawn from ATO ID 2002/23, which notes the term ‘taxi’ is not defined in the GST Act, and so the term should take on its ordinary meaning. To this end, the ATO referred to the Macquarie Dictionary 1997 definition, being ‘a motor car for public hire, especially one fitted with a taximeter.’ Applying this definition to Uber’s method of operation, it is certainly possible to consider Uber cars as being for public hire, and thus taxis for the purposes of the GST Act, with all the responsibilities that entails. By registering and providing your availability, any member of the public looking for a lift can simply request one through the Uber app on their smartphone, and the driver will meet them for pickup and drop off – ironically not dissimilar to the apps now available to request conventional taxis here on the Gold Coast.

It seems that while Uber has tried to take a revolutionary approach to travel-for-hire by pioneering the ride-sharing industry, for GST purposes, it’s actually nothing new at all - at least in the view of the ATO. With Uber strongly foreshadowing a legal challenge in reply, it will be interesting to see whether the courts share the ATO’s view, or whether they limit the scope of the term ‘taxi’ to the traditional metered model, and the impact that such a decision will have on this section of the transportation industry. 

Posted in: Tax & ATO News Australia at 28 May 15

NSW duty abolition is .... Gonski

The NSW government has yet again delayed the long awaited abolition of duty in NSW on mortgage duties on business transactions, duties on unquoted marketable securities, and duties on the transfer of non-land business assets.


NSW Premier Barry O’Farrell yesterday announced the further delay of the abolition of these duties to partly fund the contribution by the NSW Government to the Gonski reforms.
Each state government was required to abolish certain state taxes including duties as part of the trade-off for the introduction of the GST. The state governments committed to abolishing most duties as part of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations. In recent budget years the NSW government has consistently delayed the abolition of these key duties affecting businesses to fund budget holes or commitments.
It is safer to take the view that the abolitions of these duties is gonski and then we can all be pleasantly surprised when they are eventually abolished in the future.

Posted in: Tax & ATO News Australia at 24 April 13

Qantas loses GST battle with ATO

On 2 October 2012, a landmark decision was handed down by the High Court of Australia in favour of the Commissioner of the Taxation.


The majority held that that Qantas must pay GST to the Commissioner of Taxation on tickets sold for flights that were never taken, and where customers never sought a refund.
Qantas argued that it was entitled to keep $34 million in GST on non-refundable and refundable but unclaimed tickets as it had not made a supply.
On the other hand, the Commissioner of Taxation argued that Qantas had made a supply by keeping its fares for its customers.
However, after examining the terms and conditions of Qantas’ contracts with its passengers, the majority held that Qantas does not provide an unconditional promise to carry passengers or their baggage on a particular flight. 
Instead the majority held that, “[Qantas] supplied something less than that. This was at least a promise to use the best endeavours to carry the passenger and baggage having regard to the circumstances of the business operations on the airline. This was a ‘taxable supply’ for which the consideration, being the fare was received.”
This case makes it clear that taxable supply is made incurring GST liability even if a passenger does not show up for their flight. This decision could therefore implicate other businesses that charge GST on non-refundable tickets, such as tour companies, ticket operators and other transport operators.

Posted in: Tax & ATO News Australia at 05 October 12

ATO loses 3 major cases in 2011

Despite propaganda from the Acting Commissioner of Taxation to the contrary, the Australian Taxation Office copped a battering in a number of cases towards the end of 2011.

The ATO lost in three major tax cases last year – Commissioner of Taxation v Clark[2011] HCATrans 236and The Commissioner of Taxation of the Commonwealth of Australia v Multiflex Pty Ltd[2011] HCATrans 344,which both went to the High Court - and Crown Insurance Services Limited and Commissioner of Taxation[2011] AATA 847, which SMH Tax Lawyers ran on behalf of an offshore insurance company.

All three cases involved the ATO following very narrow, technical arguments and subsequently losing.

In Clark, the ATO tried to overturn a 1990 High Court decision in relation to whether changes to a trust create a new trust estate.  In Crown Insurance, the ATO went even further and tried to overturn a 1932 High Court decision.

The ATO’s strange interpretation of its model litigant obligations was obvious in the Multiflex case.  Multiflex was one of a number of large businesses where the ATO was refusing to refund the Goods and Services Tax owing to the taxpayer, notwithstanding, that this was money the ATO was required by legislation to refund – no different to an income tax refund.

While the ATO was deciding whether to challenge the GST refund, it felt that the money was better in the government’s coffers, rather than with the taxpayers.  At each level of appeal, the Courts held that the ATO was wrong and had to repay the money, but it was not until a hearing before the High Court of Australia, that the ATO finally conceded it had to pay the money back.  The financial distress which was caused to the taxpayers in the meantime was, no doubt, considerable.

Unfortunately, the ATO has a history of using litigation in tax disputes to try and force an outcome.  Although the ATO has unlimited resources and the onus of proof on its side, occasionally taxpayers are prepared to fight for their rights through the courts.

An article in this Saturday’s edition of The Australian newspaper will feature one such taxpayer, who is a client of ours. Check it out if you get a chance.

Posted in: Tax & ATO News Australia at 13 January 12

Hi Ben, The 1938 High Court decision (not 1932, sorry) referred to is Tariff Reinsurance Limited v Commissioner of Taxes (Vic) (1938) 59 CLR 194. Feel free to email me directly to discuss further. Where are you studying? Kind regards David Hughes
Comment by David Hughes lodged 05 March 12

I'm doing a tax law case analysis on the Crown case for university and was wondering which case you were referring to when you say: "In Crown Insurance, the ATO went even further and tried to overturn a 1932 High Court decision." I look forward to hearing from you shortly and would appreciate any wisdom you could impart regarding this case. Thank you very much for your time. Regards, Ben Singleton
Comment by Ben Singleton lodged 26 April 12


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Author: David Hughes

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