David Sofrà and Ric Samartgis review the ATO's recent technical discussion paper on ‘taxi travel’ in regards to FBT legislation.
The Australian Taxation Office (ATO) has just released a technical discussion paper (TDP 2017/2). The key issue up for consultation with the tax-minded public is the definition of ‘taxi travel’ for the purposes of applying a specific exemption in the Fringe Benefits Tax (FBT) legislation.
Long before anyone could reasonably have contemplated the existence of the app-based ride sharing technologies that are so prevalent today such as UBER, it was legislated that the cost of any taxi travel, where the journey begins or ends at an employee’s place of work, is exempt from FBT to the extent the travel is undertaken in a conventional licensed taxi.
The ATO has, somewhat belatedly, recognised the absurdity of otherwise identical trips being undertaken in ride share vehicles as having a different treatment for FBT, providing the impetus for this discussion paper to potentially align the tax consequences.
KPMG’s experience has been that employers have absorbed the extra FBT impost of such travel in vehicles other than taxis as an exercise in good policy. With a potential change looming, one has to wonder whether some retrospective relief will be offered to those diligent employers who have borne the FBT costs in the past.
Businesses are now also asking whether the ATO will continue to be reactive to the tax implications posed by new and disruptive technologies. With more and more ‘disrupters’ planning to expand their operations into Australia over the coming months and years, it remains to be seen whether the unique tax challenges arising from these entries will be addressed in a timely manner.
The due date for questions and comments under the discussion paper is 24 October 2017. KPMG is currently in the process of compiling a formal response, so businesses wishing to put forward their views are encouraged to contact us.