Perth metropolitan Voluntary Taxi Buyback Scheme payments



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This publication was current as at July 2019.

What are your tax obligations if you receive these payments?

This factsheet explains the tax implications for Perth metropolitan taxi plate owners who received a Voluntary Taxi Plate Buyback Scheme payment from the Western Australian State Government.

Current and former plate owners who receive a payment under the Scheme may hand in their taxi plates or choose to continue to display the taxi plates under the Transport (Road Passenger Services) Act 2018. However, the taxi plate itself will no longer provide the owner with an exclusive right to operate a taxi.

Is the payment ordinary income?

No. The payments are not ordinary income because the payments are made either as consideration for the disposal of the taxi plate, or as compensation for the loss of value attaching to the taxi plate.

Current owners who dispose of the plates

The payment should be included in the calculation of the capital gain or capital loss that is made by the plate owner on the disposal of the taxi plate.

Current owners who retain the plates

Plate owners who choose to retain the taxi plate should include the payment in the calculation of the capital gain or capital loss that is made from the rights which have been surrendered or cancelled under the Scheme.

Former owners of taxi plates

Plate owners who disposed of their taxi plate in an earlier income year would have already returned a capital gain or capital loss on the disposal. Plate owners in this situation will need to amend their income tax return for that year to include a payment received under the Scheme as additional capital proceeds for the disposal.

How do I calculate capital gains tax?

In general, your capital gain or capital loss is the difference between what it cost you to acquire your taxi plate and the consideration you received in relation to the disposal of the plate or the rights which have been surrendered or cancelled (the buy-back amount).

As a payment under the Scheme was calculated based on each plate you held, you need to allocate the amount received to each plate in accordance with that payment.

You must maintain accurate records that show when you acquired the plate, the purchase price for each plate and any amount received under the scheme for the disposal, surrender or cancellation of the plate.

The CGT event happens on the date when the taxi plate is disposed of or when you receive an amount as compensation for the surrender or cancellation of rights attaching to the taxi plate.

At which label do I show the payment in my tax return?

While the payment does not give rise to ordinary income, taxi plate holders need to declare the capital gain or capital loss that arises upon disposal of their plate or the surrender or cancellation of some of the rights attaching to it.

For individuals the net capital gain should be included at Item 18 Capital gains on your return.

For plates held through companies, trusts or funds, refer to Part C of the Guide to capital gains tax, and the Capital Gains Tax (CGT) Schedule if applicable.

Does this impact on my pay as you go instalments?

No. As the payments do not give rise to ordinary income the payments do not have pay as you go instalment implications.

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.

More information

For more information on these types of payments, see:

·
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
·
CGT concessions
·
Working out your capital gain
·
If you wish to discuss your circumstances, call us on 13 28 61. For a call back from an ATO officer, email TaxAdvice@ato.gov.au

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

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Siebel/TDMS Reference Number:  1-HJS0VER

Date of publication:  19 July 2019