We’ve had news this week of a former licence holder who has had a successful review of the tax liability on their fairness fund payment classed as capital rather than income and is now due to receive a tax refund.
Our team has worked closely with the ATO over the last 12 months while it conducted an internal review of how the transition payments and fairness fund payments were treated for tax purposes following the revoking of Victorian taxi licences in 2017.
Mr Barton wrote to the ATO in March last year on behalf of a number of former licence holders who were facing huge tax obligations following fairness fund payments.
“Many in the industry were bleeding, and still paying off loan and tax debts. They lost their licences and their source of income and were left with loan debts for property that no longer exists and then many faced tax debt on fairness fund payments,” said Mr Barton.
The Fairness Fund was established to provide means-tested financial support for licence holders experiencing financial hardship. These payments were assessed as income and were taxed accordingly.
As licence holders filed their tax returns for 2018 and 2019 many were hit with large and unexpected tax bills on their fairness funds payouts and, in many cases, were required to make pay-as-you-go (PAYG) payments for the following financial year.
Former licence holders who were forced out of the industry or chose not to continue working may be eligible to have their fairness fund payments classed as capital,
“I would encourage anyone who received a fairness fund payout to see advice from their accountant and undertake a review with the tax office.
“This would apply to anyone who is no longer working in the industry,” he said.