ATO responds to AAT decision on taxi compensation payment
The ATO says a Tribunal decision involving a payment from the Victorian Taxi Reform Fairness Fund does not change its position on other types of assistance given to taxi drivers.
The ATO has issued its response to the decision Bains v Commissioner of Taxation, which determined that a one-off payment by the Victorian government to a taxi licence operator was not income.
The decision, which was handed down by the Administrative Appeals Tribunal in August, concerned a lump sum payment of $250,000 that was made to the applicant in the case from the Victorian Taxi Reform Fairness Fund.
The applicant and his wife acquired three taxi licences between 2001 and 2010.
The Victorian government introduced a series of reforms between 2013 and 2017 that impacted the taxi and hire car industry in Victoria.
Due to the reforms, existing licenses were revoked and replaced with a new type of non-tradeable licence with effect from 1 July 2018.
In response to the reforms, the Victorian government introduced three types of financial assistance payments including the Victorian Taxi Reform Hardship Fund payment, the Victorian Transition Assistance payment and a Victorian Taxi Reform Fairness Fund payment.
The applicant applied for, and received, all three types of financial assistance payments.
In its decision impact statement, the ATO noted that this particular decision related only to the payment from the Victorian Taxi Reform Fairness Fund.
The Commissioner considered the fund payment of $250,000 to be income according to ordinary concepts under section 6-5 of the Income Tax Assessment Act 1997 and issued an amended assessment to the applicant.
The Applicant objected to this assessment and the objection was disallowed.
The Tribunal, in analysing whether the payment was income according to ordinary concepts had regard to several factors including the fact it was a one-off discretionary payment and was designed to provide relief arising from the financial hardship suffered from the Victorian taxi industry reforms.
It also noted that the fund payment was not a substitute for income forgone or future revenue that was lost. After considering these factors, the Tribunal held that the payment was not income according to ordinary concepts.
In its decision impact statement, the ATO said the Commissioner accepts the Tribunal's decision that payments from the fund are not income according to ordinary concepts and will administer the law per the Tribunal's decision.
However, the ATO noted that the Tribunal did not consider payments from the Victorian Taxi Reform Hardship Fund or the Victorian Transition Assistance payments.
The Tribunal also did not consider other payments made as a result of the taxi industry reforms in the other Australian States, it said.
“The Commissioner considers that the decision does not impact the ATO's position on the other types of financial assistance payments made to Victorian taxi licence holders,” it said in its statement.
The ATO has acknowledged there may be entities who may be impacted by the Tribunal’s decision and said it was currently identifying those taxpayers.
“The Commissioner will provide remediation pathways to these entities as a matter of importance,” it said.
The ATO said that further information about the steps being taken by the Commissioner and what taxpayers need to do if they or their entity has been impacted would be published in due course.
The ATO said it is reviewing the impact of this decision, if any, on related advice and guidance products, including:
- Fact sheet Victorian taxi industry Fairness Fund payments.
- Taxation Ruling TR 2006/3 Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business.
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