Taxi driver shocked after having to pay tax on compensation

http://www.theleader.com.au/story/4510361/double-hit-for-taxi-owners/

A Bexley taxi owner, who received $40,000 in state government compensation for two licence plates when Uber and other ride-sharing services were legalised, will lose up to half of it income tax.

Kerry Koliadis was shocked to receive the advice in a letter from Federal Minister for Revenue and Financial Services, Kelly O’Dwyer.

Rockdale MP Steve Kamper, an accountant, told State Parliament it was “pathetic” the state government did not arrange for the compensation to be treated as a business capital adjustment, rather than income.

Taxi owners were given a one-off payment of $20,000 a licence plate – with a maximum of two plates – when ride sharing services were legalised last year.

The cost is being met by a $1 levy on taxi journeys for five years.

Mr Koliadis, 76, said he an his wife Despina bought their two plates 20 years ago, using their superannuation and life savings.

“We invested about $700,000, and now they are worth about $400,000,” he said.

“It was our intention to be self funded retirees, so we did not have to rely on the federal government.

“Now, what they are doing to us is very unfair.

“I am not the only one – there are thousands of others in the same position.”

Mr Koliadis said, after “not able to get a straight answer” about whether the compensation would be taxed, he went to see Senator Arthur Sinodinos, who wrote to Ms O’Dwyer.

How pathetic, how absolutely stupid and how grossly unfair that…will see these hardworking investors paying the government for the privilege of being ripped off!– Steve Kamper

Mr Kamper produced Ms O’Dwyer’s response in State Parliament.

”The letter states in no uncertain terms that Mr Koliadis and the many thousands of other mum and dad investors like him across NSW are going to be forced to pay income tax on this small amount of compensation that the government has offered them,” he said.

”They are giving him $20,000 and taking nearly half of it. 

“How pathetic, how absolutely stupid and how grossly unfair that the state and federal governments have concocted a plan that will see these hardworking investors paying the government for the privilege of being ripped off!

“This sort of ridiculously idiotic outcome could happen only as a result of a senior ministerial team which has no business experience and no real understanding of our taxation system and which could not care less about the interests of the people who rely on it.”

Mr Kamper said it “would have been nice for Mr Koliadis to have been able to assume that this payment would be treated as a capital adjustment to his investment, as a small recompense on his massive government-facilitated investment loss”.

“Unfortunately it appears the then Treasurer Berejiklian and [Transport] Minister Constance either did not think to speak to their federal colleagues or did not care enough to argue for fair tax treatment for the taxi plate investors whose savings they have wiped out.”

The Leader’s request for comment from the Treasurer’s office and Mr Constance, was referred to Transport for NSW.

A spokesman said the taxation treatment of the $20,000 payments “will differ for recipients based on their individual circumstances and is ultimately a matter for the Australian Taxation Office”

”Transport for NSW has secured an income test exemption with Centrelink, to ensure that a transitional assistance payment did not impact on any of a recipient’s Centrelink payments,” he said.

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