Edited version of your written advice

Authorisation Number: 1012773954095

Ruling

Subject: GST and registration

Question1

Are you as a hire car driver required to be registered for the goods and services tax (GST) as per the compulsory registration requirements in subsection 144-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you drive a vehicle that has a Metropolitan Hire Car Licence, namely you being the holder of a Driver Accreditation Certificate issued under the Transport (Compliance and Miscellaneous) Act 1983 and when the vehicle is not used for the supply of taxi travel as defined in section 195-1 of the GST Act?

Advice

Yes, based on the information received, you as a hire car driver are required to be registered for GST under the compulsory registration requirements in subsection 144-5(1) of the GST Act because you are making a supply of taxi travel as defined in section 195-1 of the GST Act when you drive a vehicle that has a Metropolitan Hire Car Licence.

Question 2

Are you as a hire car driver required to be registered for GST under section 23-5 of the GST Act when you drive a vehicle that has a Metropolitan Hire Car Licence?

Advice

Section 23-5 of the GST Act is not applicable as you are required to be registered for GST under subsection 144-5(1) of the GST Act.

Question 3

Is an entity, a hire car operator, being the licence holder, who holds the hire car licence required to be registered for the GST as per the compulsory registration requirements in subsection 144-5(1) of the GST Act?

Advice

We cannot provide specific advice for this question as the issue relates to supply made by another entity. If you require specific advice concerning the supply made by the entity you may apply for a private ruling provided your application includes express written authority from the entity.

Generally, where owners of cars that provide taxi travel as defined in section 195-1 of the GST Act and drive some shifts, the owners are also required to register for GST regardless of their turnover under subsection 144-5(1) of the GST Act.

Question 4

Is an entity, a hire car operator, being the Licence Holder who holds the hire car licence, required or only required to register for GST under section 23-5 of the GST Act when the entity's current or projected turnover from its enterprise meets the registration threshold in section 23-15 of the GST Act?

Advice

We cannot provide specific advice for this question as the issue relates to supply made by another entity. If you require specific advice concerning the supply made by the entity you may apply for a private ruling provided your application includes express written authority from the entity.

Generally, where owners of cars that provide taxi travel as defined in section 195-1 of the GST Act and do not drive any shifts, the owners are not considered to be supplying taxi travel. Like other business owners must register if their turnover meets the GST registration threshold in section 23-15 of the GST Act.

Relevant fact

• You are an accredited hire car driver under the Transport Act and are not registered for GST.

• You drive a licensed vehicle owned by the car licence holder.

• You have a verbal arrangement with the car licence holder where:

• you agree to exclusively drive for the licence holder and no other operator;

• the licence holder pays all fuel expenses for the car;

• you receive XX of the gross takings;

• unless paid in advance by the passenger to the licence holder, you collect the agreed fee upon driving the passenger to the pre-arranged destination;

• you do not have any authority whatsoever to renegotiate or alter the pre-arranged booking fee charged to and agreed to be paid by the passenger.

• the hire car is made available to you for your use and on behalf of the licence holder.

• The vehicle you drive is governed by the Transport (Compliance and Miscellaneous) Act 1983 - classification of vehicles as hire cars. The licensed vehicle is a hire car licensed to operate under a Metropolitan Hire Car Licence. In accordance with the Metropolitan Hire Car Licence:

• the vehicle is only available for private hire.

• the hire car is required to be managed by, or under the direct control of the licence owner that is an owner operator.

• the hire car must be pre-booked prior to the commencement of the hiring and can only operate after previously being booked.

• You and the car operator are prohibited from accepting offers for hire off the street or within a public place. The hire car is not permitted to be hailed from the street or from a taxi rank.

• The hire car is not fitted with and is prohibited from using meters. The hiring fee or rate is agreed in advance between the passenger and the licence holder operator. You drive the hire car vehicle in accordance with the restricted licence issued by the appropriate transport authority for the transport of passengers on the day booked.

• You are not driving or supplying taxi travel as defined in section 195-1 of the GST Act.

• Your current GST annual turnover is less than $75,000. Your projected GST annual turnover is nil due to your current state of health and inability to work.

• The hire car is not a limousine. It is only available for private hire use and operates solely by being previously booked or ordered for point to point travel. It is mainly used for airport travel.

Information from the Taxi Services Commission's Website

The Taxi Services Commission (TSC) was established as the new regulator of the taxi and hire car industries as part of the Taxi Industry Inquiry initiated by the state Government.

The following information is from the TSC's website:

Metropolitan Hire Car licences

Metropolitan Hire Car Licences are issued for pre-booked point to point commercial passenger vehicle work undertaken in a luxury motor vehicle where the licence holder has an operational address located inside the Metropolitan Hire Car Licence Zone (see the boundary map).

Licences are issued for a one-off payment. Vehicles operating on Metropolitan Hire Car licences are issued with special identifying registration plates.

Overview of the hire car industry

Hire Cars

Hire cars can only operate after being previously booked. They can be luxury sedans, stretched limousines, hybrids and non-luxury vehicles.

Hire cars are a great alternative for people looking for point to point travel options and are able to plan and book in advance. Hire cars offer pre-booked only services; they can't be hailed on the street or from a taxi rank.

Hire cars do not have meters - charges are negotiated between the driver and the customer.

A one off fee is payable for the issue of a new hire car licence to operate in City A metropolitan area (see the boundary map). A one off fee is also payable for the issue of a new hire car licence to operate outside the metropolitan area.

Restricted hire vehicles

Restricted hire vehicles are similar to hire cars except that limited vehicle types qualify for this licence, such as:

• vehicles manufactured at least 25 years prior to the date of the licence application;

• vehicles which, by nature of their construction or fittings, can provide a service not available through standard hire vehicles (for example, motorcycles, off-road four-wheel drive and adventure or tour vehicles).

Special purpose vehicles

Special purpose vehicles are similar to hire cars except that they are licensed for specific purposes such as weddings or tours.

The rules for Hire Cars

Hire cars can be luxury sedans, stretched limousines, hybrids or non-luxury vehicles. They must always be pre-booked.

Hire cars are an alternative for people who are looking for point-to-point travel options, but are able to plan and book in advance.

Similarities between hire cars and taxis

Both hire cars and taxis:

• are Commercial Passenger Vehicles (CPVs)

• drivers must obey the road rules

• include GST in the fares

• drivers must hold a valid driver accreditation.

Differences between hire cars and taxis

The major differences are:

• hire cars can only accept pre-booked fares. Taxis can accept pre-booked fares but can also pick up passengers from a taxi rank and people who hail the taxi.

• Fares for hire cars are negotiated between a passenger and a driver or the hire company before the journey. Taxis fares are determined by the taximeter through a regulated maximum fare or a price notified fare, and may also include other relevant surcharges and fees.

Zones

Hire cars are licensed to operate in either the metropolitan hire car zone or the country hire car zone.

Metropolitan hire cars can accept pre-booked work to or from anywhere in the Australian state.

Country hire cars can accept pre-booked work to or from anywhere in the Australian state, except for a journey that is wholly within the metropolitan hire car zone.

Hire car drivers

Becoming a hire car driver

If you would like to drive a hire car in the Metropolitan Zone, you must obtain Commercial Passenger Vehicle and Bus Driver Accreditation with Metropolitan Taxi/Metropolitan Hire Car (MTMH) Endorsement.

Transport (Compliance and Miscellaneous) Act 1983

The following definitions are from the Transport (Compliance and Miscellaneous) Act 1983:

commercial passenger vehicle means any motor vehicle (together with any trailer fore-car side-car or other vehicle or device, if any, attached thereto) which is used or intended to be used for carrying passengers for hire or reward but does not include a bus used to provide a bus service;

hire car means a commercial passenger vehicle classified as a hire car by the licensing authority under section 145;

hire car licence means a commercial passenger vehicle licence in respect of a vehicle which operates or is to operate as a hire car;

new taxi-cab licence means a taxi-cab licence granted under section 143 on or after the commencement of section 8(1) of the Transport Legislation Amendment (Foundation Taxi and Hire Car Reforms) Act 2013;

operate means-

a) in the case of a commercial passenger vehicle (other than a taxi-cab), carry passengers for hire or reward; and

ab) in the case of a taxi-cab, carry passengers for hire or reward and includes to ply or stand for hire or to use the taxi-cab in any other way for the purpose of carrying passengers for hire or reward; and

b) in the case of a commercial goods vehicle, carry goods for hire or reward or for any consideration or in the course of any trade or business whatsoever.

taxi-cab means a commercial passenger vehicle which is used or intended to be used for hiring by the public on demand and which operates by being hailed or from a stand appointed for the use of such vehicles or which has been previously booked or ordered but does not include such a vehicle which operates solely by being previously booked or ordered;

TSC means the Taxi Services Commission established by section 115B of the Transport Integration Act 2010.

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 Subsection 144-5(1)

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

Reasons for decisions

Question 1

Division 144 of the GST Act is about taxis and section 144-1 of the GST Act provides that taxi operators are required to be registered regardless of turnover.

Under subsection 144-5(1) of the GST Act, an entity is required to be registered for GST if, in carrying on its enterprise, it supplies taxi travel.

Under subsection 144-5(2) of the GST Act it does not matter whether the entity's GST turnover meets the registration threshold or in carrying on its enterprise, it makes other supplies besides supplies of taxi travel.

Section 195-1 of the GST Act defines taxi travel to mean 'travel that involves transporting passengers, by taxi or limousine, for fares'.

The purpose of Division 144 of the GST Act is to require all taxi operators to register for GST. In the context of taxi operations, it is considered that services that are provided by the taxi industry or are similar to and essentially in competition with the taxi industry are 'taxi travel'.

You state that the hire car you drive is not a taxi as the hire car is not available for public hire, cannot be hailed on the street or from a taxi rank and does not have meter. Further the hire car is excluded from the definition of 'taxi-cab' as defined by the Transport (Compliance and Miscellaneous) Act 1983.You are therefore not providing taxi travel as defined in section 195-1 of the GST Act.

We note that the TSC states the following on their website in regard to hire cars:

• Hire cars are a great alternative for people looking for point to point travel options and are able to plan and book in advance. Hire cars offer pre-booked only services; they can't be hailed on the street or from a taxi rank. Hire cars do not have meters - charges are negotiated between the driver and the customer.

• The major differences between hire cars and taxis are:

• hire cars can only accept pre-booked fares. Taxis can accept pre-booked fares but can also pick up passengers from a taxi rank and people who hail the taxi.

• Fares for hire cars are negotiated between a passenger and a driver or the hire company before the journey. Taxis fares are determined by the taximeter through a regulated maximum fare or a price notified fare, and may also include other relevant surcharges and fees.

• In regard to similarities between hire cars and taxis, both hire cars and taxis:

• are Commercial Passenger Vehicles (CPVs)

• drivers must obey the road rules

• include GST in the fares

• drivers must hold a valid driver accreditation.

Further in the definition of the Transport (Compliance and Miscellaneous) Act 1983:

commercial passenger vehicle means any motor vehicle (together with any trailer fore-car side-car or other vehicle or device, if any, attached thereto) which is used or intended to be used for carrying passengers for hire or reward but does not include a bus used to provide a bus service.

hire car means a commercial passenger vehicle classified as a hire car by the licensing authority under section 145.

operate means-

a) in the case of a commercial passenger vehicle (other than a taxi-cab), carry passengers for hire or reward; and

ab) in the case of a taxi-cab, carry passengers for hire or reward and includes to ply or stand for hire or to use the taxi-cab in any other way for the purpose of carrying passengers for hire or reward; and

b) in the case of a commercial goods vehicle, carry goods for hire or reward or for any consideration or in the course of any trade or business whatsoever.

taxi-cab means a commercial passenger vehicle which is used or intended to be used for hiring by the public on demand and which operates by being hailed or from a stand appointed for the use of such vehicles or which has been previously booked or ordered but does not include such a vehicle which operates solely by being previously booked or ordered;

In this instance, we consider that the services offered by the Metropolitan Hire Car are similar to a 'taxi travel' as defined in section 195-1 as:

• According to the TSC under a Metropolitan Hire Car Licence, hire care is another alternative for passengers to be transported in a commercial passenger vehicle for a fare, which in this case the fee determined by the licence holder when the passenger pre-booked the transport. Hence the transport services made by the hire car are similar to that provided by taxi and limousines under Division 144 of the GST Act. How and when the booking of the transport is made is, in our view, not a requirement for the application of Division 144 of the GST Act.

• The absence of a meter in the hire car is not, in our view, a requirement for the application of Division 144 of the GST Act. Fares for hire car travel and taxi travel are generally tabulated by means outside the drivers' control as in your case. The fares for the transport are set independently of the driver's actions since it is the hire car operator who determines the fare and taxis fares are determined by the taximeter or in the absence of a meter through a regulated maximum fare or a price notified fare. The fact that you use the word 'fee' instead of 'fare' does not stop you from receiving payments from the passengers for the journey. The TSC refers to the payments received by a hire car operator as 'charges' and 'fares' because in the end the hire car operator is being paid for their journey.

• We note that Division 144 of the GST Act has from the inception of GST covered hire car drivers with some exceptions such as wedding car operator. This view is in the Taxi Industry Issues register (available at www.ato.gov.au) and appears as follows:

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.

You referred to ATO ID 2002/23 and quoted that the word 'Limousine' is therefore used in the context of taxi operations. The purpose of ATO ID 2002/23 is to clarify when a limousine is considered to be providing 'taxi travel' for the purposes of the GST Act since a limousine can be used for different circumstances depending on the type of licence the car operator holds. According to the TSC, the licence for a special purpose vehicle is restricted to a specific purpose such as weddings or tours.

Further we consider that the inclusion of the word 'limousine' in the Division 144 definition is not redundant as you suggest. Both taxi and limousine are used in the definition, limousine being included to broaden the reach of the Division to expand the GST definition of taxi travel compared with the definition found in other statutes. Historically the Commissioner has accepted that vehicles other than cars for example, mini-buses can be included within the Division 144 definition.

To summarise, you are required to be registered for GST under the compulsory registration requirements in subsection 144-5(1) of the GST Act when you drive a vehicle that has a Metropolitan Hire Car Licence since your services satisfy the definition of taxi travel as defined in section 195-1 of the GST Act.

Question 2

As determined in question 1 you are required to be registered for GST under subsection 144-5(1) of the GST Act. Subsection 23-5 of the GST Act is therefore not applicable to you.

Questions 3 and 4

We cannot provide specific advice for questions 3 and 4 as the issues relate to supply made by another entity. If you require specific advice concerning the supply made by the entity you may apply for a private ruling provided your application includes express written authority from the entity.

However, we can provide you with general guidance. General guidance does not interpret the law or apply it to the factual situation. The decision as to how those principles apply to your circumstances remains with you.

The Taxi Industry issues Register provides guidance to taxi drivers and owners. In regard to owners of cars that supply taxi travel as defined in section 195-1 of the GST Act, the following information is provided to them:

Do owners have to register?

Owners who also drive some shifts 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 must register if their turnover exceeds $75,000.