A recent case in Australia held that UberX suppliers are required to register for GST even if they do not meet or exceed the ordinary GST registration threshold. This aligns the GST treatment of UberX supplies with the supplies made by taxi drivers.

Key issue in the case

Under Australia's ordinary GST rules, enterprises with a GST turnover of less than AUD 75,000 then they do not need to register for GST. However, as an exception to this rule, if the entity supplies taxi travel it would need to register even if this threshold is not met. The term taxi travel is defined in the GST Act as "transporting passengers, by taxi or limousine, for fares." The key issue in this case was whether UberX drivers supplying taxi travel.

Outcome of the case

The Federal Court noted that a broad and non-technical practical business tax approach should be taken in construing relevant provisions of the GST Act. In this regard, based on the ordinary definition of taxi the Federal Court accepted the Commissioner's submissions and held that UberX drivers were transporting passengers by taxi travel and how that meaning is understood in practice.

The UberX driver in question was supplying taxi travel because he was supplying travel that involved transporting passengers by taxi for fares. The absence of a taximeter (nor the other characteristics put forward by Uber) was not an essential aspect of the ordinary meaning of the word taxi that a vehicle must have such a device. As a consequence, UberX drivers would be required to register for GST and are not afforded the benefit of the GST turnover threshold of AUD 75,000.