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FBT on Uber trips: Employers Should Take Care
If you get Ubers regularly, the Tax office may have you in its sights. Fringe Benefits Tax may be payable on Uber trips provided to employees, according to a new Tax Office guideline confirmed last month.
Getting an Uber may trigger Fringe Benefits Tax for the employer. The Tax Office treats the Uber service differently for FBT and GST.
At the conclusion of the Federal Court proceedings in February 2017, it was decided that for GST purposes UberX drivers would be considered ‘taxi’s’ and would therefore need to be registered and report GST quarterly. This was an interesting decision as Uber has consistently marketed itself as a technology company, not a taxi company or even strictly a ride sharing platform.
This is important due to the application of the FBT taxi travel exemption. The ATO has maintained its present stance that this exemption does not cover ride sourcing services – namely Uber (despite the marketing banner). For normal taxi travel, a trip by an employee is automatically exempt from FBT so long as the trip begins or ends from the office. From a practical perspective, Ubers and taxis are used interchangeably, so this may give employers pause for concern.
The FBT minor benefit exemption may provide a remedy for employers facing FBT on Uber trips. An Uber trip could still be considered exempt for FBT purposes if it is provided under the following circumstances:
- The cost of the trip was less than $300
- It is provided infrequently and irregularly
- It is provided as a contingency – e.g. The employee was working overtime to finish an urgent project.
The double standard in the tax office’s treatment of Uber may be ironed out in the future, but for now we are advising clients to review their existing policies to ensure that where Uber is used, it has a defensible position to argue it should be excused under the minor benefit exemption.
If you are perplexed at this convoluted thinking around FBT on Uber trips, perhaps you need to take advantage of an outsourced CFO service to help bring clarity to the situation.
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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, crypto and entrepreneurs.