• Registration for ABN, GST and fuel tax credits

    Updated

    Issue

    ATO decision

    22/03/00

    Do taxi drivers have to register for GST?

    Non-interpretative - straight application of the law.

    Yes. If you drive a taxi, and carry on an enterprise, then you must register for goods and services tax (GST) irrespective of your turnover.

    If you providing taxi services you are likely to be carrying on an enterprise. This is particularly the case if you operate in a business-like manner where, for example, invoices are provided to your customers.

    To find out more about the characteristics of a business see Are you operating a business?

    If the driver is an employee, then the driver must not register for GST. The driver is an employee when the driver is not entitled to keep any of the takings and is paid a set amount to drive the taxi. In these limited circumstances, the employer is considered to be the person providing taxi travel and must register for GST.

    01/07/08

    Why do drivers have to register for the GST irrespective of turnover?

    Non-interpretative - straight application of the law.

    For other businesses, the GST registration turnover threshold is $75,000. For taxi drivers, including chauffeur driven limousines and hire cars, there is no registration turnover threshold. This means that anyone who carries on an enterprise of driving a taxi, chauffeur driven limousine or hire car, must register for GST, unless they are an employee for pay as you go withholding (PAYG withholding) purposes. The government chose to apply compulsory registration of taxi drivers for several reasons including:

    • to avoid the confusion that would be created if some taxis had to charge GST and others did not
    • avoiding the added problem that would arise if a passenger was using a taxi for a business trip (creditable acquisition). In this instance, the passenger would want to be able to claim an input tax credit for the GST included in the fare
    • meter rates are set by each state authority and after 1 July 2000 all meters were adjusted to reflect the GST. If some drivers were registered and others were not, all would be collecting the higher rate. This would disadvantage drivers who had to be registered if the ordinary registration turnover threshold applied.

     

    01/07/08

    Do owners have to register?

    Non-interpretative - straight application of the law.

    Owners who also drive some shifts and are carrying on an enterprise, are also required to register for GST regardless of their turnover. Owners who do not drive shifts and just lease out the license and cab are not supplying taxi travel and have the choice of whether or not to register if their turnover is under $75,000. Like all other businesses, owners who carry on an enterprise must register if their turnover exceeds $75,000.

    27/10/03

    What forms have to be completed?

    Non-interpretative - straight application of the law.

    Taxi drivers have to complete an Australian business number (ABN)/GST registration form. New drivers who commence after 1 July 2000 must register within 21 days of commencing a business as a taxi driver.

    You also have to complete an activity statement for each quarterly or monthly tax period. A tax period is every three months for most drivers, but is every month for businesses with a turnover in excess of $20 million. Drivers that are eligible for quarterly tax periods can also elect to use monthly tax periods. The activity statement asks for information required to determine your PAYG and GST obligations.

    27/10/03

    When is a driver an employee or under a bailment arrangement?

    Most drivers are under a bailment arrangement. This means that you make a payment of some kind that allows you to use the taxi to drive. The payment could be in the form of lease payments or an amount that is paid in at the end of each shift. It does not matter whether the amount is a set amount or a percentage of the shift takings.

    In unusual cases, a person may be an employee in the taxi industry. An employee works for the owner or leaseholder of a cab and is paid an hourly rate or weekly wage that is independent of the cab's actual takings. Employees are subject to PAYG withholding on their earnings. That is, amounts of tax are withheld by their employer and sent to us. The amounts withheld will be credited against the employee's income tax liability when they lodge their income tax return after the end of the financial year. Employees will not have to account for GST. Records of expenditure will still needed to be provided to your employer. The employer is considered to be the person providing taxi travel.

    27/10/03

    What is the definition of a limousine?

    This issue is a public ruling for the purposes of section 105-60 of Schedule 1 of the TAA.

    As with taxi drivers, the driver of a limousine involving the transportation of passengers for fares is required to register for GST.

    The term 'limousine' is not defined in the GST Act and therefore takes its ordinary meaning which would include large luxurious motor vehicles.

    17/12/03

    What happens if I do not register for GST?

    Non-interpretative - straight application of the law.

    If you are a taxi driver, you are required to register for GST. If you do not, the Commissioner can register you and backdate your registration. You can also be subject to an administrative penalty for Failure to Register. The Commissioner is also able to make an assessment of your net GST amount for a tax period.

    01/07/08

    If I am a taxi driver and I also have another business, do I have to register both businesses?

    Non-interpretative - straight application of the law.

    In this situation, you as the entity, have two enterprises. You will only require one ABN and will only register once for GST. You will account for GST on both businesses in your activity statement. It does not matter if the other business has a turnover of less than $75,000 because, as a taxi driver, you are required to register irrespective of turnover. Accordingly, all your enterprises are included in the registration.

    If enterprises are run by separate entities, each entity will be entitled to register independently. An example of this could occur if you as an entity carry on an enterprise of taxi travel and another business is conducted by a registered company. In this situation, you as an entity still must register your taxi driving enterprise but the company can choose not to register if its turnover is less than $75,000. If you are not registered, you do not remit GST to us, but cannot claim input tax credits for the GST included in the cost of your business acquisitions.

    01/07/06

    Do bailors who do not drive have to register for GST?

    Non-interpretative - straight application of the law.

    A bailor who does not drive is not providing 'taxi travel' and is not required to register for GST if his or her turnover is less than $75,000. If you are not required to register for GST, you should still consider applying for an ABN. If you do not have an ABN, your drivers will be required to withhold 46.5% of their pay-ins under the 'No ABN Withholding' rules and pay those amounts to us. You may register for GST even if you are not required to. Registering for GST is the only way you can claim the input tax credits you accrue during the course of your enterprise.

    04/05/09

    Should I register for fuel tax credits?

    Non-interpretative - straight application of the law.

    No. If you drive a light vehicle which travels on a public road, such as a taxi, car or small van you are not entitled to claim fuel tax credits.

    04/05/09

    What should I do if I have registered for fuel tax credits?

    Non-interpretative - straight application of the law.

    You can cancel your registration by either:

     

      Last modified: 19 May 2015QC 16403