Frequently Asked Questions and Answers:
What are your tax obligations if you receive these payments?
This fact sheet explains the tax implications for taxi licence holders who were provided a Transitional Assistance Payment from the NSW State Government under thePoint to Point Transport (Taxis and Hire Vehicles) Act 2016.
Under the scheme, payments of $20,000 each for up to two licences have been made to eligible licence holders. (Questions on the NSW Government point to point reforms should be directed to Transport for NSW.)
Does income tax apply?
Yes. The payments are assessable income because they are paid to assist licence holders to adjust to a more competitive market and to offset a reduction of income. They are not made as part of a buy-back arrangement or for the cancellation of a taxi licence.
You can claim a tax deduction for costs incurred for seeking legal or professional tax advice in relation to the taxation of the payment.
Does goods and services tax apply?
No. To be subject to goods and services tax (GST) you have to supply something in return for the payment. As you only have to meet eligibility criteria and you don’t do doing anything for the payment, the amount you receive is not subject to GST. More information can be found in Goods and Services Tax Ruling GSTR 2012/2 Goods and services tax: financial assistance payments.
At which Label do I show the income in my tax return?
The payment should be included in the same label that you have previously used to declare your income from holding your taxi licence (for example, Item 24 Label V Other Income on your tax return).
A full explanation as to why these payments are considered to form part of your assessable income can be found in Taxation Ruling TR 2006/3 Income Tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business
Where a Government payment is made to an industry to assist businesses within that industry to continue operating, the payment is assessable income of the recipient.
On this basis, NSW State Transitional Assistance Payments are assessable as ordinary income to licence holders.
The payment is not capital in nature because it does not require licence holders to give up or sell their taxi licence plate or otherwise bring their business to an end.
- Taxation Ruling TR 2006/3 – Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business
- Class Ruling 2017/15 - Income tax: assessability of payments from the Victorian Taxi Reform Hardship Fund
- Goods and Services Tax Ruling GSTR 2012/2 – Goods and services tax: financial assistance payments
For a callback from an ATO officer, emailIf you wish to discuss your circumstances, call the ATO on 13 28 66. This information was provided from the Australian Taxation Office.
Disclosure: Our commitment to you. We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. If you feel that this publication does not fully cover your circumstances, or you are unsure how it applies to you, you can seek further assistance from us. This publication was current at 8 May 2017. © Australian Taxation Office for the Commonwealth of Australia.