Private hire vehicle (PHV) drivers will soon be able to claim tax deductibles for expenses such as fuel and vehicle rental. They may also find a second income stream by making deliveries without a passenger on board.
This comes after the Parliament session on 10 September where Ministry of Finance (MOF) and Ministry of Transport (MOT) responded to feedback on the Income Tax Act and the provision of courier services by taxi and private hire operators.
In a letter to the MOF on 1 February 2018, National Private Hire Vehicle Association (NPHVA) and National Taxi Association (NTA) Executive Advisor Ang Hin Kee recommended PHV hirers to be entitled to similar tax benefits as full-time taxi hirer.
He wrote: “A full-time single shift taxi hirer over a 6-day period will have to achieve an average of 20 revenue trips per day in order to be able to cover daily rental, fuel cost and take-home income. A full-time PHV driver may do fewer revenue trips as their consumer base is limited. We recommend that PHV Hirers be treated as full time drivers and be allowed to apply for tax deductibles if they achieve a minimum of I5 revenue trips per day.”
Mr Ang reiterated this call during Committee of Supply in March 2018. This was one of the 37 out of 100 suggestions from public consultation that was accepted and incorporated into the Income Tax (Amendment) Bill presented in Parliament on 10 September 2018.
Following a consultation with NTA and the NPHVA on the common expenses incurred by drivers, the bill also proposed an increase in expense ratio from 40 per cent to 60 per cent and a simplified process where taxpayers will not have to claim tax deduction for service fees paid to platform providers such as Grab and RYDE separately.
Last year when Amazon invited cabbies and private hire drivers to fulfil orders under its Prime Now “ultrafast” delivery service, it was halted by the Land Transport Authority (LTA) as it is not within regulations.
In a letter to LTA on 8 May 2018, Mr Ang urged for the rules to be reviewed considering the growing demand for e-commerce and online retail shopping. He highlighted that the delivery or courier service can not only complement drivers’ earnings when demand of rides are low, but also maximise usage of existing vehicles and help Singapore progress towards a car-lite society.
In Parliament, Senior Minister of State for Transport Janil Puthucheary announced that taxi and PHV operators can now approach LTA to perform such services on a “limited trial basis”. The authority will need to work with the operators to safeguard commuters’ interests such as the availability of taxis or private-hire cars and provision of third-party insurance coverage.
In a Facebook post, Mr Ang said: “Typical private car insurance policies contain ‘limitation to use’ that restricts the use to ‘social, domestic and pleasure’ purposes. This means that if a car is used for ‘hire or reward’, eg courier services for a fee, the insurer can void the policy and the policyholder could be denied cover. Glad that taxis & PHV have commercial insurance. Hope that third party operators & taxi companies can work out submissions to LTA now that our call for a change of rules has been responded to positively.”
Meanwhile, MOT reminded drivers not to deliver goods without a passenger on board without permission as anyone caught violating the rule risks having their vocational licenses revoked.
This includes doing so through the RydeSEND service recently announced by private hire operator RYDE. LTA has sent RYDE a formal warning last month about it. So far, no violations by the drivers have been reported.
