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  • Taxi licence holders – industry assistance payments and passenger movement levies

    We want to help taxi licence holders (including hire car and limousine licence holders) understand your tax obligations in relation to industry assistance payments and passenger movement levies, by providing guidance on what to look out for and where to go for help.

    On this page:

    Taxi industry assistance payments

    In response to the arrival of ride-sourcing arrangements such as UberX, and GoCatch, state governments announced reforms to the regulation of taxi and ride-sourcing industries.

    These reforms include industry assistance payments to taxi licence holders, which help:

    • offset the impacts of new regulatory regimes
    • taxi licence holders compete under new industry arrangements.

    Depending on the state, industry assistance payments to eligible taxi licence holders include:

    • one-off transitional assistance payments to help transition to the new regulatory arrangements
    • recurring hardship or income support payments. These are means-tested in some states.

    These rules also apply to state government payments made to hire car and limousine licence holders.

    Some states made further announcements that their industry assistance payments are to be funded through the introduction of a passenger movement levy on metropolitan taxi and ride-sourcing trips.

    Income tax consequences of payments

    If you hold a taxi licence (including a hire car or limousine licence) and you receive an industry assistance payment from your state government in relation to the licence (excluding a licence surrender payment), it's generally not a capital receipt. It’s more likely to be ordinary income as it's a government transitional assistance and hardship payment made to licence holders to:

    • assist them to continue operating
    • compensate them for loss of income.

    Licence holders are required to include the full amount of the payment in their assessable income.

    The payments are generally not capital receipts (also known as capital proceeds) because the licence holder isn't required to give up or sell their taxi licence plate, or finish their business.

    If a licence holder leaves the industry after receiving the transitional assistance or hardship payment, the payment may be included in calculating the capital gain or loss made by the licence holder when they surrendered or sold the taxi licence.

    If you seek legal or professional tax advice about these payments, you can claim a tax deduction for the costs.

    GST consequences of payments

    Generally, there are no GST consequences in relation to the receipt of transitional payments or hardship payments if the licence holder:

    • need only meet eligibility criteria
    • doesn't change their behaviour in order to receive the payment.

    Passenger movement levies

    In states and territories that have introduced passenger movement levies to fund industry assistance packages, additional income tax and GST issues arise.

    Income tax consequences of levies

    In some states the passenger movement levy is imposed on the service provider and levied on each trip at a flat rate. For example, in NSW, all taxi and booking service providers need to pay a temporary $1 levy on all point-to-point trips taken.

    To recover the levy, the service provider may charge a fee to a third party (for example, a taxi operator or taxi driver) and that fee may be passed on to passengers.

    If you are a third party collecting the levy on behalf of a service provider:

    • include the amount charged to passengers in your assessable income in that income year
    • you can claim an income tax deduction for the fee the service provider charged you in that income year.

    The same rules apply to the service provider.

    GST consequences of levies

    Paying the levy doesn't attract GST. However, if the service provider or third party chooses to pass on the levy to passengers, it's treated as an increase in price for the supply of services. In that case, the on-charged amount will form part of the fare paid by a passenger and the GST to be remitted is calculated as 1/11th of the increased price.

    The third party collecting the levy on behalf of a service provider may be entitled to a GST credit for the GST payable on the supply between the parties. This includes the GST on the increased price as a result of passing on the levy. This will depend on whether the supply is a creditable acquisition to the third party.

    Pay as you go (PAYG) instalments

    The transitional assistance and hardship payments and the passenger movement levies that are considered assessable income will also be instalment income for PAYG instalment purposes.

    For licence holders who are paying PAYG instalments; if you pay using the:

    • instalment rate method – you'll need to include this payment in your instalment income on your activity statement. If you've forgotten to put the payments in a previous activity statement, you can amend the instalment income for that statement prior to lodging your tax return.
    • instalment amount method – you can continue to pay the normal amount. However, you should remember to set money aside to pay at the time of your tax return.

    After you lodge your tax return, these payments will be included in the calculation of your next year’s instalments. If the amount or rate is too high (as you won't be receiving any more payments) you can vary the instalment rate or amount you pay.

    If you're not currently required to pay PAYG instalments, this payment may bring you into the instalments system after you lodge your tax return. If this occurs, we will let you know what your options are.

    See also:

    Labels to use in your tax return

    Individuals should include the payments in the same label as previously used to declare income from holding a taxi licence (for example, Item 15 Net income or loss from business or Item 24 Label Y Other income).

    For companies, the payment should be included in Label 6 Q Assessable government industry payments.

    See also:

    Fact sheets for licence holders

    Need help?

    • Phone us on 13 28 66
    • If you are experiencing difficulties or hardship in meeting your tax debts, refer to Help with paying
      Last modified: 18 Jul 2019QC 52707