Edited version of your written advice

Authorisation Number: 1012772233548

Ruling

Subject: GST registration for tour and charter enterprise

Question 1

Are you required to be registered for GST in relation to your tour and charter enterprise under Division 144 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. You are not required to be registered for GST in relation to your tour and charter enterprise under Division 144 of the GST Act.

Relevant facts and circumstances

You are registered for GST.

Your projected GST turnover is less than $75,000.

You operate a tour and charter enterprise.

You operate under a tour and charter vehicle licence. Under the licence, you are restricted from providing regular passenger transport.

You operate a X seater bus.

Your bus is not fitted with a meter.

You cannot operate from taxi ranks or tout roads/public places for business.

You operate on a pre-booking system and work according to bookings only.

Pricing varies as per your website.

You provide three categories of service.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

A New Tax System (Goods and Services Tax) Act 1999 section 144-5

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision

Section 23-5 of the GST Act provides that you are required to be registered for GST if you are carrying on an enterprise; and your GST turnover meets the registration turnover threshold (currently $75,000 per annum).

In your case:

• You are carrying on a tour and charter enterprise; and

• Your projected turnover is approximately $X which does not exceed the registration turnover threshold.

Therefore, you are not required to be registered for GST unless there is a specific provision of the GST Act that requires you to register.

Section 144-5 of the GST Act provides that you are required to be registered for GST if, in carrying on your enterprise, you supply taxi travel, despite the requirements of section 23-5 of the GST Act.

Taxi travel is defined in section 195-1 of the GST Act to mean travel that involves transporting passengers, by taxi or limousine, for fares. It does not distinguish between a taxi and a limousine. The terms 'taxi' and 'limousine' are not defined in the GST Act and therefore take on their ordinary meaning.

The Macquarie Dictionary, 1997, 3^rd ed, The Macquarie Library Pty ltd, NSW defines 'taxi' as 'a motor car for public hire, especially one fitted with a taximeter' and the term 'limousine' as 'any large luxurious car'.

The Explanatory Memorandum that accompanied the A New Tax System (Goods and Services Tax) Bill 1998 does not provide any further assistance as to the meaning of 'taxi' or 'limousine' in the context of Division 144 of the GST Act, and importantly does not distinguish between a taxi and limousine. This means that anyone who transports passengers on point to point journeys for a fare, for example, anyone who drives a taxi, chauffeur driven limousine or hire car is required to be registered for GST pursuant to Division 144 of the GST Act.

Some assistance in determining whether your tour and charter business consists of taxi travel is to be found in the 'Taxi industry issues register' on the Australian Taxation Office website. The Industry issues register poses the question:

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

The answer provided is set out below:

'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 drives 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 fi the ordinary registration turnover threshold applied.'

There is a further distinction set out in the Australian Taxation Office Interpretative Decisions ATO ID 2002/23 and ATOID 2002/24. ATO ID's set out the Commissioner's view in relation to specified factual situations.

Although the ATO ID 2002/23 answers the question of whether a wedding car operator is required to be registered for GST as per the compulsory registration requirements in subsection 144-5(1) the principles contained in this ATO ID are relevant to your situation.

ATO ID 2002/23 explains that

'The purpose of Division 144 of the GST Act is to require all taxi operators to register for GST. It provides that the term 'limousine' is therefore used in the context of taxi operations. Taking this into account, it is considered that only limousine services that are provided by the taxi industry or are similar to and essentially in competition with the taxi industry are 'taxi travel'.

In the case of an entity such as a private hire vehicle operator who only uses their vehicles in accordance with the restricted licences issued by the relevant transport authority for the transport of passengers, the entity is not providing a service that is similar to the services provided by the taxi industry. Nor is it providing a service that essentially competes with the taxi industry. As such, the entity is not providing travel in a 'limousine' for the purposes of the GST Act. Therefore, the entity is not supplying taxi travel as defined in section 195-1 of the GST Act.'

Similarly, although the ATO ID 2002/24 answers the question of whether a supplier of reception and transfer services to overseas students is required to be registered for GST, the principles contained in this ATO ID are relevant to your situation.

ATO ID 2002/24 explains that:

'…The conveying of passengers from the airport to their accommodation is part of the reception and transfer service that the entity provides. The entity does not use its vehicle in a taxi like manner or operate its vehicle on a fare for distance or time arrangement. Additionally, the entity's vehicle is not available for public hire. The entity's vehicle is not a 'taxi' and it is considered that the entity is not providing a service that is similar to services provided in the taxi industry nor is it providing a service that essentially competes with the taxi industry. Accordingly, the entity is not supplying taxi travel as defined in section 195-1 of the GST Act.'

We consider that you are not a taxi driver and your vehicle is not a taxi or a limousine.

Therefore, you are not supplying taxi travel in a taxi limousine or hire car for fares and you are not required to be registered for GST under section 144-5 of the GST Act.

Further, as your expected turnover of $X does not exceed the GST registration threshold, you are not required to be registered for GST under section 23-5 of the GST Act.

As you are currently registered for GST, you may choose to cancel your registration.

If you continue to be registered for GST, you will be required to charge GST to your clients and will be entitled to claim credits on your creditable acquisitions as per the basic rules of GST.

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