Jack Malarkey

Well-Known Member
http://www.theaustralian.com.au/nat...n/news-story/ad6f1dd9b1da35a76c90c588b1940793

This article is behind a paywall but the following paragraph provides the gist. The article also mentions that the Victorian Public Transport Minister Jacinta Allan has written to the federal Treasurer arguing that the payments should not be taxed.

Extract:

Licence holders are entitled to $100,000 for their first licence and $50,000 for a second, third or fourth licence. But drivers, some of whom bought their licences for more than $500,000, were furious yesterday as they argued the “joke” payout could be cut even further by tax. Last year the Australian Taxation Office indicated such payments would be classed as income rather than property or an asset.
 
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Apollo

Well-Known Member
http://www.theaustralian.com.au/nat...n/news-story/ad6f1dd9b1da35a76c90c588b1940793

This article is behind a paywall but the following paragraph provides the gist. The article also mentions that the Victorian Public Transport Minister Jacinta Allan has written to the federal Treasurer arguing that the payments should not be taxed.

Extract:

Licence holders are entitled to $100,000 for their first licence and $50,000 for a second, third or fourth licence. But drivers, some of whom bought their licences for more than $500,000, were furious yesterday as they argued the “joke” payout could be cut even further by tax. Last year the Australian Taxation Office indicated such payments would be classed as income rather than property or an asset.
Poor b...... can't take a trick.
 

Jack Malarkey

Well-Known Member
So they should as they claimed the original purchase price as a tax deduction and ten made an income including cash for years
The cost of the licence wouldn't have been deductible as it would have been capital expenditure.

I suspect that the amounts would not have been assessable income if the Victorian legislation had treated them as part compensation for the permanent reduction in value of the taxi licence. There then would have been no impact at all for licences acquired before 20 September 1985.

For licences acquired after 19 September 1985, there would have been a reduction in the capital gains tax cost base of the licence, resulting in a larger capital gain or smaller capital loss on eventual disposal of the licence.

In many cases, the capital gains tax small business concessions would have eliminated or significantly reduced any capital gains tax payable.

Here's some 'light reading' for those who have a strong interest in such matters: http://law.ato.gov.au/atolaw/view.htm?locid=txr/tr9535/nat/ato.
 
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ubermercury

Well-Known Member
The cost of the licence wouldn't have been deductible as it would have been capital expenditure.

I suspect that the amounts would not have been assessable income if the Victorian legislation had treated them as part compensation for the permanent reduction in value of the taxi licence. There then would have been no impact at all for licences acquired before 20 September 1985.

For licences acquired after 19 September 1985, there would have been a reduction in the capital gains tax cost base of the licence, resulting in a larger capital gain or smaller capital loss on eventual disposal of the licence.

In many cases, the capital gains tax small business concessions would have eliminated or significantly reduced any capital gains tax payable.

Here's some 'light reading' for those who have a strong interest in such matters: http://law.ato.gov.au/atolaw/view.htm?locid=txr/tr9535/nat/ato.

Why does every lazy journalist quote the $500k paid for a licence?
How many paid that amount to the government? I suspect none.
It appears to be very difficult to ascertain how much was paid for a licence at various stages of the program.

Edit: a licence obtained prior to 1985 gets a $100k payout?
 

Apollo

Well-Known Member
Why does every lazy journalist quote the $500k paid for a licence?
How many paid that amount to the government? I suspect none.
It appears to be very difficult to ascertain how much was paid for a licence at various stages of the program.

Edit: a licence obtained prior to 1985 gets a $100k payout?
Got my first one for $120,000.That was in 1993.You could make serious coin back then.Sold that one in 2010 for $520,000.
 

ubermercury

Well-Known Member
Got my first one for $120,000.That was in 1993.You could make serious coin back then.Sold that one in 2010 for $520,000.

Did you buy it initially from the state or on the private market?
I don't know the answer to that question but if compensation is payable in such a case, the asset would usually be exempt from capital gains tax as a pre-CGT asset.

Jack - that was a rhetorical question. I don't think a licence that has been held for 32 years deserves to be paid out. It's had a very lucrative return already.
 

Free2Roam

Active Member
http://www.theaustralian.com.au/nat...n/news-story/ad6f1dd9b1da35a76c90c588b1940793

This article is behind a paywall but the following paragraph provides the gist. The article also mentions that the Victorian Public Transport Minister Jacinta Allan has written to the federal Treasurer arguing that the payments should not be taxed.

Extract:

Licence holders are entitled to $100,000 for their first licence and $50,000 for a second, third or fourth licence. But drivers, some of whom bought their licences for more than $500,000, were furious yesterday as they argued the “joke” payout could be cut even further by tax. Last year the Australian Taxation Office indicated such payments would be classed as income rather than property or an asset.
Sale of a business asset at a loss is a capital loss even if it results from a confiscation event from a Communist government. As such the sale proceeds are not income and not taxable. Further, this loss can be offset against other capital losses in the same asset class. Don't worry about assertions that folk make in relation to the ATO. The ATO had not issued a Private Ruling or industry determination.
Most tax commentators have said it's a capital loss.
 

ubermercury

Well-Known Member
Sale of a business asset at a loss is a capital loss even if it results from a confiscation event from a Communist government. As such the sale proceeds are not income and not taxable. Further, this loss can be offset against other capital losses in the same asset class. Don't worry about assertions that folk make in relation to the ATO. The ATO had not issued a Private Ruling or industry determination.
Most tax commentators have said it's a capital loss.

When people sold their state issued licences for a massive profit do you know if they paid capital gains tax?
 

everythingsuber

Well-Known Member
When people sold their state issued licences for a massive profit do you know if they paid capital gains tax?
They paid capital gains tax if the licence was purchased after the date the capital gains legislation came in.
It's interesting the taxi owner compensation of 30k in South Australia is not taxed.
 

Apollo

Well-Known Member
Did you buy it initially from the state or on the private market?


Jack - that was a rhetorical question. I don't think a licence that has been held for 32 years deserves to be paid out. It's had a very lucrative return already.
Private.
 
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