Treasury has just released some miscellaneous amendments that include a redefinition of the word “taxi” in regard to certain tax arrangements. An exposure draft addresses the ongoing problem for taxpayers around the definition of taxi for FBT purposes (see the second link on this Treasury webpage, “Miscellaneous Amendments Bill Explanatory Memorandum”, and scroll to page 19).
The bill, under Part 2 “Amendments commencing first day of the next quarter” has been drafted with the stated aim to resolve administrative difficulties with the previous definition “which resulted from ride sharing providers entering into the market”. The “next quarter” is generally taken to be after the amendments become law.
The EM states: “Formerly, the Fringe Benefits Tax Assessment Act 1986 defined a taxi as ‘a motor vehicle licenced to operate as a taxi’. As a result of ride sharing providers entering into the market, this has become difficult to administer as the meaning of ‘licensed to operate as a taxi’ is highly contentious and may differ considerably between the states and territories depending on their licensing laws.”
To avoid these difficulties, the new law replaces references to a “taxi” with “a car used for taxi travel (other than a limousine)”. The EM says the term taxi travel is defined as having the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999, namely, “travel that involves transporting passengers by taxi or limousine, for fares”.
The proposed amendment will have effect after royal assent and commence, depending on when that is, from the next 1 January, 1 April, 1 July or 1 October. The EM says the amendment preserves the existing policy of covering vehicles used for travel involving transporting passengers for a fare by way of a car, but not including luxury cars such as limousines.
Affected areas of the Fringe Benefits Tax Assessment Act 1986 include items 62 to 66, 68 and 69, paragraph 7(7)(a), subparagraphs 8(2)(a)(i) and 8(2)(a)(ia), paragraph 47(6)(aa)(i), subsections 58Z(1) and (2) and definition of ‘taxi’ and definition of ‘taxi travel’ in subsection 136(1).
Consultation for the draft bill is open until 27 September. Practitioners can provide their views on the proposed amendments on the Treasury website.
