In Uber BV v Commissioner of Taxation  FCA 110 the Federal Court found that UberX services constituted the supply of “taxi travel” within the meaning in s 144-5(1) of the GST Act. The Court accepted the Commissioner’s submissions that the ordinary meaning of the word “taxi” was a vehicle available for hire by the public which transports a passenger at his or her direction for the payment of a fare that will often, but not always, be calculated by reference to a taximeter. The Court found that the ordinary meaning of “taxi” was sufficiently broad to encompass the UberX service.
Division 144 of the GST Act provides an exception to the general rule that an entity is only required to be registered for GST when its annual turnover meets the statutory threshold – currently $75,000. Under Division 144 an entity is required to register for GST if it supplies “taxi travel” – regardless of its turnover. The words “taxi travel” are defined to mean “travel that involves transporting passengers, by taxi or limousine, for fares”.
Uber submitted that Division 144 was intended to create an exception from the general rules for a specific industry – being taxi operators – and the Division should not be construed as having been intended to extend to some new state of affairs to which it might arguably extend. Uber also contended that the words “taxi” and “limousine” bore a trade or non-legal meaning, or at least those words bore an ordinary meaning that was best suited to achieving the statutory object of carving out a specific existing industry from the operation of an otherwise universally applicable general (and beneficial) rule. This ordinary meaning had characteristics which were founded on the regulation of the taxi industry one each of the States and Territories, including that they taxi travel must be provided by a registered taxi and a licensed driver, the vehicle must be physically identified as a “taxi”, the vehicle have a light on the roof to show its availability, the vehicle contain a taximeter which calculates and displays to the passenger the progressive fare.
The Commissioner contended that the definition of “taxi travel” connoted transportation, by a person driving a private vehicle, of a passenger from one point to another at the passenger’s direction and for a fare, irrespective of whether the fare is calculated by reference to a taximeter. The Commissioner also contended that it was wrong for Uber to rely on State and Territory regulatory regimes applying to the taxi industry because the GST Act is a federal statute – also, the GST Act provides in s 9-10(3) that a supply occurs irrespective of whether it is made in compliance with the law.
The Court found that a plain object of Division 144 was to address the difficulties that had arisen in overseas jurisdictions because not all taxi drivers were registered for GST – meaning that GST was not paid by all drivers. The Court accepted the Commissioner’s construction that, in these circumstances, the concept of “taxi travel” as defined in s 195-1 should be construed broadly and not technically. The Court also considered that a practical and common sense approach should be applied and to avoid an approach which was “unduly technical or overly meticulous and literal” – referring to Young J in Saga Holidays.
The Court found that the UberX driver in question (driving a Honda Civic) was supplying “taxi travel” because he was supplying travel that involved transporting passengers by taxi for fares. The Court considered that fact that his car did not have a taximeter installed was not determinative of the question because this was not an essential aspect of the ordinary meaning of the word “taxi” that a vehicle must have such a device. Nor were the other characteristics advanced by Uber necessary elements of the ordinary meaning of the word “taxi”. The Court did not consider that the vehicle involved travel by a “limousine”, as the vehicle was not a luxury car.
The decision is a further example of the Court applying a practical approach to the application of the GST Act to transactions, in this case “ride sharing” services. The Court accepted the Commissioner’s submission that it was appropriate to regard the relevant provisions of the GST Act as “always speaking” – therefore merely because software technology of the type used in providing the UberX service may not have been known at the time that Div 144 was inserted into Pt 4-5 of the GST Act was not determinative of the question of whether that Division could apply. This approach may give the Commissioner some comfort as to the continued relevance of the GST Act to transactions that develop in the digital economy.