The Australian Government has now extended the Fringe Benefits Tax exemption for ‘taxi travel’ for employees to ride-share, with the likes of Uber, DiDi and Ola now falling under ‘taxi travel’.
The inclusion of ride-sharing under ‘taxi travel’ will enable companies to receive the same tax benefits as they would for ‘taxi travel’, allowing for a wider spread of private transportation options. Ride-share businesses such as Uber and Ola are often a less expensive choice for businesses, if chosen as a business travel option instead of the traditional taxi service.
First introduced in 1995, the FBT exemption for taxi travel, allowed employers to provide a safe and secure method of transportation for their employees. And at this time, ride-sharing (referred to as ride-sourcing by the ATO), did not exist.
FBT exemption for taxi travel eligibility
For taxi travel to be exempt from FBT, the following criteria must apply:
- The employee is sick or has been injured and requires a safe transportation option;
- The journey taken by the employee (whole or part) must be from or to:
- The employee’s place of work;
- The employee’s place of residence;
- Any other place that it is deemed necessary, or appropriate, for the employee to go as a result of the sickness or injury such as a hospital or GP.
Reasoning for legislation change
This update to the legislation, allowing FBT exemption for ride-sharing transportation options under ‘taxi travel’ is a modern and sensible amendment, allowing many Australian businesses and employees to access the benefits of a wider choice of business travel options.
Many businesses and employees opt for ride-sharing as their favoured method of taxi travel, in which companies such as Uber and Ola have a global presence, display proven safety records with greater reliability and GPS tracking available.
Ride-sharing offers businesses a less expensive option for employee transport, whilst giving the opportunity to minimise administration tasks, such as reconciling receipts from employee travel expenses.
Understanding the intricacies of FBT implications can be challenging. Many of our employees are highly experienced and skilled in all aspects of FBT, so please contact your Allan Hall Advisor if you would like some advice or assistance.