The ATO have now finalised their fact sheets regarding the tax implications of both Transition Assistance and Fairness Fund payments.
Transition Assistance - Download factsheet here
The central issue is whether or not TA payments will be treated as income for tax purposes. The factsheet explains:
“No. The payments are not ordinary income because the payments are made as consideration for the cancellation of taxi-cab or hire car licences which brings those assets to an end. The payment should be included in the calculation of the capital gain or capital loss that is made by the licence holder on the cancellation of the taxi-cab or hire car licence(s).”
The factsheet then goes on to give several examples of how to calculate capital gains or losses in various situations.
Fairness Fund - download factsheet here
Again, the central issue is whether or not FF payments will be treated as income for tax purposes. The factsheet explains:
“Yes. The payments are assessable income because they are designed to provide financial support to licence holders that are experiencing:
- a lack of current income or the loss of a future income stream that is significantly impacting on household spending capacity,
- significant difficulty in meeting ongoing debt obligations related to the licence(s) held, or
- a lack of available funds to meet financial commitments.
You can claim a tax deduction for costs incurred for seeking legal or professional tax advice in relation to the taxation of the payment.”