What’s the difference between a Taxi and Uber?

Knowing the difference could save you tax

You may be aware of an FBT exemption available for taxi travel which either begins or ends at an employee’s place of work. What this means is that a business can pay for the cost of a single journey for an employee that begins or ends at work and claim a tax deduction with no FBT obligation. With the arrival of ride sharing services such as Uber, the question arises if this exemption extends to Uber services as well as taxis.

The ATO has recently issued guidance that the FBT exemption does not apply to ride sharing services in a vehicle that is not licensed to operate as a taxi. This position is based on the definition of ‘taxi’ in the FBTAA and is consistent with prior ATO statements. Therefore, if an Uber is taken for travel starting or ending at work, and the employer pays for the expense, FBT may apply.

There are other exemptions that could be applied to reduce the FBT where an Uber is taken, such as the minor benefits exemption or otherwise deductible rule. However, the facts of the situation would need to be examined to determine whether these exemptions may apply.