Uber Vs Commissioner of Taxation,2017 FCA 110

Case Summary And Judgement Analysis

At the heart of the Uber B.V. v Commissioner of Taxation [2017] FCA 110 case, was the question of whether Uber drivers were under any obligation to register for the Goods and Service Tax (GST).

Some countries permit companies to distinguish themselves from others in the same industry, as is the case with Uber, while others find it contrary to their laws, as was the case when the matter had to proceed to the Australian Federal Court. It was a subject of statutory construction where businesses with a turnover less than $75,000 did not require any form of registration to GST, but only during special exemptions. The new tax system (Goods and Services Tax) requires all limousine, and taxi drivers register with the GST regardless of their annual turnover. As such, individuals who run enterprises that “supply taxi travel,” under the law, should register for GST purposes. Here, the taxi travel refers to any travel that entails the moving of passengers by limousines or taxi with the aim of collecting fares. The bone of contention, therefore, was whether in providing their UberX services to their customers (UberX Riders), the drivers (Uberx Partners) were supplying “taxi travel.” In this essay, I will provide a detailed summary of the case and an analysis of the judgment.

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According to Australian law, the GST Act stipulates that all enterprises registration is not a necessity for those that make less than $75,000, but provides an exception in the case of “taxi travel.”  The GST’s introduction was the brainchild of the Howard Government and it became operational from 1st July 2000 to replace the whole sale sales tax scheme. Additionally, its inception was meant to phase out a number of Territory Government taxes, levies and duties to provide a broad-based consumption tax formula. Consequently, UberX drivers find themselves at odds with this law, as the expectation is that they will register with the GTS, even when their turnover is below $75,000. (“Uber B.V. V Commissioner of Taxation [2017] FCA 110”) In this case, the applicants were seeking an avowal from the Federal Court of Australia on that this “supply” that UberX drivers provide is not “taxi travel.”  Before beginning the proceedings, both parties came to an agreement that the core issue that the trial needed to focus on was Mr. Brian Colin Fine’s declaratory order that, as an UberX partner, he didn’t “supply taxi travel.” A clear interpretation of the GST Act’s section 144-5(1) was seeking to provide a simple explanation and give a resolution in this complex matter. In solving this debacle, the court would be able to determine whether UberX Partners would now start paying GTS tax.

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The court had first to establish the nature of the services that UberX Partners provide to their riders. The Commissioner describes the services as “relevant supplies” and was also fully elucidated in Mr. Fine a Mr. Craig Johnson’s affidavits. Mr. Jackson would act as a solicitor for the applicant, proving that as for 12th September 2015, his client was earning a living as an UberX Partner. In providing his service to the customer, two smart phone applications are put to use; the “Uber Partner App” and the “Uber App.” In the case of the “Uber App,” Riders can register and request transportation services from registered taxis (Uber Taxi), luxury hire cars (UberBlack) and available drivers (UberX).  On the other hand, with the “Uber Partner app” the driver can receive the requests made, accept or decline them. For this particular proceeding, the court’s focus was on the UberX Partners that earn a living by providing their services to the UberX Riders. Mr. Jackson went ahead to state that the parent company (Uber Technologies) whose location is in the United States, has more than 110 Uber bodies and operates in more than 300 cities worldwide. The entity in question here was Uber B.V, a company whose incorporation took place in the Netherlands and creates the applications while acting as a licensee of the software for users beyond the United States.

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Rasier Operations also sub-licenses the software through the arrangement it enters with UberX Partners, for them to receive the requests made. The standard form agreements between these two parties that are relevant to the services that the Riders receive are the Service Agreement and the “Bring Your Own Device” terms (“Uber B.V. V Commissioner of Taxation [2017] FCA 110”).  According to the GST Act, taxable supplies apllies to entities that are carrying an enterprise, and the turnover that they receive meets the threshold spelled out by law together with “taxi travel.” Registration is mandatory for taxi drivers regardless of their turnover. In their submission, Uber went on to argue that even “limousine” should also have been put into consideration as it is a hire car, charges more than an UbeX ride and booking. However, the submission made by the counsel for the Australian Tax Office (ATO) defined “limousine” as a car for hire that provides point to point transportation at a fee. The Judge, Griffiths J, took the time to review the submissions and accept both definitions. In his conclusion, he was quick to mention that Parliament’s intention was to differentiate between the terms “taxi” and “limousine” while pointing out that the differences did not originate from the operation features. The only difference that exists is that the limousine is ostensibly a luxury car that individuals hire for transport.

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The term “taxi” was also put under consideration by both parties and was to be given various statutory interpretations to aid the court in concluding its deliberation. According to Uber, in its submission, the definition of the term “taxi” was to be used in describing all point to point transportation that individuals provide at a fee. Furthermore, their submission was o the opinion that the term should also be put to use in the regulatory context about the taxi industry. The company would also go on to argue that the uniform colors, badges, hail markets, ranks, rooftop lights, and badges were all distinctions that define the operations of “taxi.” It was these features that distinguish it from taxis, and Uber went ahead to explain that these operational features were not available in their “privately owned” vehicles. Submissions by the Commissioner of Taxation were of the opinion at the regulatory context was not relevant in this case as taxi regulation would often differ from one state to another. An example was the absence of taximeters as requirements in Western Australia. According to the Commissioner, analysis of operations in the taxi industry was not the obligation of the Court in addition to the regulatory intervention. The submissions made by the Australian Tax Office (ATO) opined that statutory construction and the principles found in it would apply to the term “taxi,” and the names have given their ordinary and universal meaning. With this approach, the ATO was able to claim that a “taxi” was a vehicle that one could hire for transportation purposes for a fee and the use o a taximeter.

Judge Griffiths J finally made a ruling that was in agreement with opinions that were held by the Australian Tax Office (ATO) on the ordinary meaning of the term “taxi.”Specifications made were that it was necessary first to use a broad approach while dealing with the provision from a legislative context. It was also critical to establish the differences that exist between “taxis” and Uber vehicles. Such a ruling indicates that that the level of granularity that Uber made submissions on was irrelevant. The Judge would also infer that the understanding of “taxi” was a general term and did not apply to the regulatory concept. The operational features were also only addressing the regulations that were far from the GST Act objectives. The Judge, therefore, gave an order of dismissal on the application made by Uber. The judgment thus brought to an end the issue of a “ridesharing company,” putting an end to the battle that the enterprise had with the Australian Tax Office (ATO). The advice was later provided later by the Australian Tax Office (ATO) regarding those providing services via the “sharing economy.” The 10% tax under the GST was only for annual turnovers that would surpass $75,000. It is also vital to acknowledge that according to the Australian Tax Office (ATO) that in its service, Uber was providing a ride-sharing service similar to “taxi travel” with the UberX Partners being required to register with the GST, regardless of what their turnover was. Uber would soon respond by delineating their disappointment with what they termed as a flawed interpretation of Australian law on a business blueprint that was a year old.

Judgement Analysis

The submissions made had one primary issue as their goal; the elaboration of the term “taxi travel.” In this case, the GST Act was meant to only apply to the Australian taxi industry and was not to extend to any current state of affairs although it was possible to do so. The words “limousine” and “taxi” in their non-legal meanings were representative of a trade and were different in meaning. The applicants were, therefore, suggesting that services that UberX provided did not have any of the essential features that a regular taxi service had. The claim made here was that the cars used by UberX Partners had different marks that distinguished them from the taxis. Furthermore, the contrast would extend to the manner in which customers booked their rides, how the drivers accept them, calculation and payment system.

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The applicant had also submitted about the differences that were there between limousine services and UberX services. The commissioner was quick to respond by claiming that it was incorrect for the applicant to rely on territory or state regulatory regimes in demystifying the “limousine” and “taxi” concepts.  Here it was important to rely upon dictionary meanings that gave support to the proposition that a “taxi” was simply a car for hire that transports passengers to their preferred direction at a fee. The term “limousine” refers to a private vehicle brought to the public sphere for hire in carrying passengers. A noticeable difference is the use of a taximeter to calculate the fare applies only to the Uber taxi. It was this basis that the Commissioner used to argue that Uber Partners, by transporting a passenger by limousine or taxi were providing “taxi services.”

The judgment made would directly impact the operations of UberX drivers with the Judge’s principle constructions also applying to a plethora of GST matters. Industries under the regulatory regime would bear the full brunt of the ruling as the judge takes a general approach. The case also endorses the principle of the inadmissibility of expert evidence while dismissing the meaning of the word “limousine.” In the ruling, the judge was aware that distinctions were to border between the legal and literal sense of the word. Statutory construction mostly depends on the context of the word, while taking into account the extrinsic materials used and their legislative history. The GST Act had one objective; to provide a practical meaning devoid of any technical complexities. According to the Judge’s findings, registration was mandatory for all UberX Partners regardless of the income that they generate. Nevertheless, this ruling raises additional questions on the role tax and regulation in a “sharing economy.” If regulation is to become part and parcel of such industries, it should fit for the digital age as the present inefficient systems prevent the available entities from giving any new services or creating employment for persons in the countries where it is active.


From a pratical perspective, negotiating the tax and regulation policy would be more sensible as it would provide room for further discussion to take place before the implementation of draconian policies. Moreover, the decision made by the Court would directly affect Uber fares and create a very competitive environment for the taxi industry. Normally, Uber rides are 20% cheaper than traditional taxi services in Australia. Enforcing the registration to GST would, therefore, mean that Uber’s; led will eventually have to be halved; a decision that would make taxis a competitive option.

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