Volkswagen, Skoda and Audi emissions settlement payments
Check if any income tax treatments apply to Volkswagen, Skoda and Audi class action settlement payments.
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Background of the class action
This information addresses the class actions bought against Volkswagen, Skoda and Audi in relation to the global diesel fuel emissions issue.
The class actions settled after 4 years of litigation. On 1 April 2020 the Federal Court approved the settlement in Australia.
You need to consider the income tax treatment of any settlement payment you receive as an individual. Generally, a settlement payment is a capital payment and not ordinary income. Often, payments you receive for these kinds of losses are not taxable as a capital gain tax (CGT) event, but instead reduce the cost base of your asset (such as your car).
A car is a vehicle designed to carry a load of less than one tonne and less than 9 passengers.
Income tax treatment
The income tax treatment of your payment will depend on:
- how you use your vehicle
- if the vehicle fits the definition of a car or other vehicle.
Settlement payment and your tax return
You don’t need to declare a settlement payment you receive in your tax return for a car you use for either:
- private purposes only
- both a private and work-related use.
CGT and settlement payments
Generally, if you sell a car there are no CGT implications.
As there is no CGT on the sale of cars, the payment has no CGT impact for cars. However, it will change the cost base for the car.
Check if any income tax treatments apply to Volkswagen, Skoda and Audi class action settlement payments.