Uber attempts to raise doubt around taxi definition in GST legal case

Uber has argued that its ridesharing service UberX does not fall within the definition of taxi or limousine, and therefore should be exempt from having to register for the Goods and Services Tax (GST).

In the Australian Federal Court on Wednesday, Uber's lawyers pointed out to Justice John Griffiths that based on five main matters, UberX drivers should be exempt from having to pay GST. These five matters included signage, fares, taxi ranks and hail zones, taxi meters, and hiring.

Counsel representing Uber specifically addressed how the GST laws have defined "taxi travel" as "transporting passengers in a taxi or limousine for fares".

He specifically pointed out that the definition says taxi travel "means" rather than "includes", and therefore the statutory definition of taxi travel is only relevant to taxis, taxi operators, and limousines -- no other vehicles.

Counsel representing Uber further went on to declare that UberX services are not taxis because their vehicles do not have a roof light that has taxi printed on it; there are no meters fixed in the vehicle to display the fares incurred; and, unlike taxis that have the universal service obligation where they cannot -- in normal circumstances -- refuse a passenger, UberX drivers can.

However, the "real point of distinction" of UberX versus taxis and limousines, according to counsel, is that taxis are the only vehicles that can pick up passengers from the curb side or be hailed.

Additionally, Uber disputed that UberX also does not fall under the definition of limousine, which is "any large luxurious car". As an example, he pointed to the specific case of Sydney-based UberX driver Brian Fine.

"Mr Fine's Honda Civic would not fall under that definition."

Uber's counsel also referenced Fine to point out that unlike taxis, where the service they provide is anonymous, UberX drivers know the details of their passengers, including their name, mobile number, and location, and are aware that Uber collects their personal information such as credit card details.

Uber lodged legal action against the Australian Taxation Office (ATO) back in August last year in the hope that the ATO would overturn its decision requiring Uber drivers to register for GST.

Last May, the ATO issued a directive that advised those providing a ridesharing service must have an Australian Business Number and be registered for GST.

However, in documents lodged to the Federal Court, Uber argued the public issue by the ATO "unfairly targets Uber driver-partners".

An Uber spokesperson previously told ZDNet that it believes the ATO's guidance should not have been issued, given that a federal tax review is currently under way.

"To be very clear, we believe all our driver-partners should pay their appropriate share of tax and meet their tax obligations," the company said.

"However, we feel they have been unjustly singled out by the ATO for different tax treatment than truck drivers, bike messengers, Airbnb hosts, or any other participant of the sharing economy."

The company went on to express its disappointment in the ATO, saying that it is unfairly targeting Uber's driver-partners, who "must register and remit this tax from the first dollar earned". This is in comparison to individuals who are only required to register for GST once they reach a turnover of more than AU$75,000 a year.

"The guidance by the ATO has tried to fit a new technology model from today into a 1990s regulatory framework that was written long before this technology ever existed. Common sense would tell you that isn't going to work," the company said.

On Monday, the NSW government announced that it is offering AU$20,000 in compensation grants to taxi drivers who have lost business due to Uber and other ridesharing services.

The AU$250 million industry transition package will allow the drivers to apply for upfront payments for up to two licences, AU$100 million of which will be paid for by a AU$1 levy on all taxi and ridesharing trips, meaning that NSW ridesharing and taxi users will have to collectively contribute AU$100 million to pay for the scheme. AU$142 million has also been set aside for hardship claims.

According to the Transport NSW website, eligible drivers' licences must include a condition that it may be transferred, and drivers have to have held their licence prior to July 1, 2016. Applications for the payments are currently open until January 13, 2017.

Uber was officially legalised in NSW by the state government in December last year, with a new regular and commissioner put in place to oversee the industry. A transition period was also put in place for a number of months for ridesharing drivers to obtain the correct accreditation to drive legally on NSW roads.

This was after the ACT became the first Australian state or territory to legalise ridesharing last October. This included the same regulatory conditions that are enforced for taxi drivers, such as driver history checks and vehicle safety checks.

Uber was then deemed to be legal in Western Australia under major taxi industry reform in December, with the proviso that drivers had to obtain special "omnibus" licences in addition to their standard driving licences; while a decision passed by a Victorian County Court judge in favour of a Melbourne Uber driver effectively gave the service the green light to operate in Victoria in May.

While South Australia followed suit at the start of this month, Uber is still battling the Queensland government to become legal in that state. The Queensland government last month passed new legislation to crack down on Uber drivers, which included increased fines and more powers for traffic enforcement officers.

The Northern Territory government is still refusing to allow Uber to operate.