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is compensation payment from government to surrender taxi license taxable?

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our taxi license was compulsarily acquired by the Victorian Government, $100,000 compensation was given which was well under it's value, is this amount taxable?  If so where in the tax form should it be declared?

1 ACCEPTED SOLUTION

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Most helpful response

ATO Certified Response

Former Community Support

Replies 0

Hi @janrei,

 

Welcome to our Community!

 

The payment you've received will be subject to the capital gains tax rules. See the Victorian-taxi-transition fact sheet for details of how the basic CGT rules apply to Victorian taxi industry and how you declare any capital gain or loss. Generally, capital gains tax is calculated as the difference between what you originally paid for the asset and what you received for disposing of the asset.

 

There are some rules that can apply to taxpayers in certain situations and can impact on capital gains tax outcomes. In some circumstances the former owner of an asset may be entitled to rules called the Small business CGT concessions that can apply to reduce any capital gain.

 

If you choose to reinvest the proceeds from cancellation of your licence to invest in a similar asset you may be able to choose a CGT roll-over, if certain requirements are satisfied.

 

As these taxation issues can often be complex in their operation you may benefit from further professional assistance. Alternatively, if you require more specific advice from the us, you can contact our Early engagement team by submitting a request form or requesting a call back and someone will contact you to discuss your situation further.

 

Thanks, JodieH

2 REPLIES 2

Taxicorn

Replies 0

Yes it is.

 

Class Ruling 2017/15

 

Paragraph 27

Most helpful response

ATO Certified Response

Former Community Support

Replies 0

Hi @janrei,

 

Welcome to our Community!

 

The payment you've received will be subject to the capital gains tax rules. See the Victorian-taxi-transition fact sheet for details of how the basic CGT rules apply to Victorian taxi industry and how you declare any capital gain or loss. Generally, capital gains tax is calculated as the difference between what you originally paid for the asset and what you received for disposing of the asset.

 

There are some rules that can apply to taxpayers in certain situations and can impact on capital gains tax outcomes. In some circumstances the former owner of an asset may be entitled to rules called the Small business CGT concessions that can apply to reduce any capital gain.

 

If you choose to reinvest the proceeds from cancellation of your licence to invest in a similar asset you may be able to choose a CGT roll-over, if certain requirements are satisfied.

 

As these taxation issues can often be complex in their operation you may benefit from further professional assistance. Alternatively, if you require more specific advice from the us, you can contact our Early engagement team by submitting a request form or requesting a call back and someone will contact you to discuss your situation further.

 

Thanks, JodieH