Western Australian Taxi Transition Assistance Package
Our commitment to you
This publication provides you with the following level of protection:
If you follow our information in this publication and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we must still apply the law correctly. If that means you owe us money, we must ask you to pay it but we will not charge you a penalty. Also, if you acted reasonably and in good faith we will not charge you interest.
If you make an honest mistake in trying to follow our information in this publication and you owe us money as a result, we will not charge you a penalty. However, we will ask you to pay the money, and we may also charge you interest. If correcting the mistake means we owe you money, we will pay it to you. We will also pay you any interest you are entitled to.
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 as at 24 April 2018.
What are your tax obligations if you receive these payments?
This fact sheet explains the tax implications for Perth metropolitan taxi plate owners who received a Transition Assistance Package payment from the Western Australian State Government.
The Transition Assistance Package includes:
- Adjustment Assistance (to adjust to a new, more competitive environment), and
- Hardship Fund (to provide financial support for those that have suffered financial hardship).
Does income tax apply?
Yes. The payments are assessable income because they are paid to assist taxi plate owners to adjust to changes in the taxi industry and to provide financial support. They were 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 or do something in return for the payment. As you only have to meet eligibility criteria, the amount you receive is not subject to GST.
At which label do I show the income in my tax return?
For payments to individuals 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 15 Net income or loss from business or Item 24 Label Y Other Income on your tax return).
For payments to companies the payment should be included in Label 6 Q Assessable government industry payments.
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:
- the Adjustment Assistant payment is ordinary income and not capital: the payment does not require plate owners to give up or sell their taxi plate or otherwise bring their business to an end.
- the Hardship Fund payment is in the nature of income substitution and for this reason is also ordinary income.
Where, however, a licence holder has permanently and completely exited the taxi industry, or has evidence that they have undertaken a process to permanently and completely exit the taxi industry, at the time of receiving the Adjustment Assistance or Hardship Fund payment, the payment may be included in the calculation of the capital gain or capital loss that is made by that holder on the surrender, sale or disposal of the taxi licence(s) of that holder.
- Taxation Ruling TR 2006/3 Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business
- Class Ruling CR 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
If you are experiencing difficulties or hardship in meeting your tax debts, refer to Help with paying for assistance.
For a callback from an ATO officer, email TaxAdvice@ato.gov.au
If you wish to discuss your circumstances, call the ATO on 13 28 66.
You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
At the time of assembly of this factsheet (March 2018), the ATO is aware that the WA Government is proposing a voluntary buy-back scheme for metropolitan taxi licences. This scheme, however, will not impact the tax outcomes that arise in relation the Adjustment Assistance and Hardship Fund payments described above even though the amount of the payment(s) may be taken into account in determining the buy-back consideration.