Private ruling: GST and the supply of tour services by tour operator in a passenger vehicle.
Published: June 2012

Ruling: Q1: Are you required to be registered for GST in relation to an enterprise of taking paying passengers on food and wine tours? | A1: No

Relevant facts and circumstances: § You are registered for GST, reporting annually. § You plan to operate a tour service taking people tours. § You will be acquiring a 'Public passenger vehicle ancillary certificate' which allows you to provide passenger transport in a 'Small Passenger Vehicle'. § You are not allowed to work as a taxi driver under this license. § You plan to hire a vehicle to take your clients on their tours. § Clients will be charged a set fee for the tours which includes the provision of lunch. § You have a number of set routes that you take your clients on. These routes are changed to adapt to the time of the year.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 23-5, | A New Tax System (Goods and Services Tax) Act 1999 144-5 and | A New Tax System (Goods and Services Tax) Act 1999 9-5.

Reasons for decision: Summary: Section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999. (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 an enterprise of conducting tours in a vehicle whereby you drive and guide people to various sites, and § your projected turnover is $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. Some assistance in determining whether your tour business consists of taxi travel is to be found in the Tax Industry issues log on the Australian Taxation Office website. The Industry issues log poses the question: | Detailed Reasoning - Why do drivers have to register for the GST irrespective of turnover?: The answer provided is set out below: …... 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 if the ordinary registration turnover threshold applied. There is a further distinction set out in the Australian Taxation Office Interpretative Decisions ATO ID 2002/23. ATO ID's set out the Commissioners view in relation to specified factual situations. Although the ATO ID answers the question of whether "a wedding car operator is required to be registered for goods and services tax (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. The following factors indicate that you are not supplying taxi travel in a taxi limousine or hire car for fares: § You do not charge fares for your services but charge a daily rate which includes lunch § Your license from the Department of Transport specifically excludes you from operating as a taxi driver and § Your route is not determined by the passenger but yourself and is not simply transport from point A to B. Accordingly, 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. We have enclosed a cancellation form as requested.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.