A class action was brought 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.
Payments you receive for these kinds of losses are not usually taxable as a capital gain tax (CGT) event. They instead reduce the cost base of your asset (such as your car).
The income tax treatment of your settlement payment will depend on:
- how you use your vehicle
- if the vehicle fits the definition of a car or other vehicle.
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.
Generally, if you sell a car there are no CGT implications.An income tax treatment may apply to a settlement payment you receive from the Volkswagen, Skoda and Audi class action.