Ride sharing disruptor Uber has lost its fight against the Australian Taxation Office in the Federal Court. It was decided that Uber's drivers are providing taxi travel within the meaning of the GST legislation.
Under the legislation, most entities that have a turnover of less than $75,000 are not required to be registered for GST. An exception to this rule is that taxi and limousine operators are required to be registered regardless of turnover (s144.5).
Uber argued the following points to support its opinion that its drivers are not providing services that are "travel, that involves transporting passengers, by taxi”:
- Uber drivers use their own private cars and they are not marked as taxis.
- Uber drivers are not required to hold any taxi licences.
- Uber drivers do not have the advantages of accepting street hails, waiting at dedicated ranks or using privileged lanes.
- Uber customers are able to obtain an estimate of the cost of the ride and see star ratings of the drivers and other information to enable them to determine whether to proceed with the service.
- Uber costs are calculated based on both time taken for the ride and distance covered in the ride rather than by a mixture of time or distance.
Uber claimed that the ordinary meaning of taxi travel should be the same as the regulatory concept of taxi. The Commissioner however argued that a regulatory concept of the meaning of taxi would be erroneous as the GST Act is federal law and regulatory concept of taxi would rely on state and territory regulations.
Judge John Griffiths however agreed with the Commissioner that the words in the legislation "should be given their ordinary, everyday meanings and not a trade or specialised meaning”:
"I accept the Commissioner’s submission that the ordinary meaning of 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.”
Uber drivers will now have to be registered for GST.
Uber of course, may appeal.
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