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Uber taxi court ruling imposes GST on rideshare giantpoll

Uber driver Martyn Barry, who drives in Newcastle but lives in Cessnock, is keen to see the service expand to the Hunter Valley. Picture: Perry DuffinSo it turns out an Uber is actually a taxi – at least for tax purposes.

That’s the upshot of a Federal Court judgment, handed down on Friday.

Uber had fought an 18-month battle to avoid GST, but will now need to work out how to apply the ruling to its 50,000-plus partner-drivers.

For the ride-sharing giant, it will mean having to pay the 10 per cent GST tax on trips.

For governments, meanwhile, the decision means a tax windfall.

And, finally, for passengers, there is the prospect of potentially higher costs – if Uber decides to pass on the tax.

In July 2015 Uberlaunched legal actionagainst the n Tax Office, challenging the office’s demand it and its drivers pay GST.

Threshold questionEnterprises that earn less than $75,000 a year do not need to register to pay GST. Uber claims most of its driversearn lessthan $20,000 a year.

However there is a specific exclusion – taxis. Taxi drivers have to pay GST no matter what they earn. The ATO had ruled Uber drivers were taxi drivers, meaning they were not exempt from the tax.

In court in July, Uber had argued it was not a taxi service, and therefore was exempt from GST.

Ubers couldn’t pick up passengers without a booking, nor could they use a taxi rank – and therefore they did not qualify as taxis, the companyargued.

The Tax Office argued the legislation might say “taxi”, but really meant all vehicles that drove people from place to place for a fare. It quoted six dictionary definitions of the word taxi to argue that it was a broad term, rather than specific to yellow-painted-cars with taxi metres.

No special meaningIn a ruling handed down on Friday Justice John Griffiths found the word “taxi” should be given “their ordinary, everyday meanings and not a trade or specialised meaning”.

“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,” the Justice wrote.

The Justice also found a taxi did not need to have a taxi-metre, pick up fares without a booking or be able to use a taxi rank in order for it to be considered a taxi.

In a brief statement Uber said it was disappointed with the court’s decision.

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