Taxi drivers to pay income tax on licence compensation

http://www.theaustralian.com.au/national-affairs/taxi-drivers-to-pay-income-tax-on-licence-compensation/news-story/ad6f1dd9b1da35a76c90c588b1940793

Driver Greg Schmidt says the payout and tax slug is a joke.
The Australian12:00AM September 6, 2017
The Victorian government has asked Scott Morrison to ensure compensation paid to taxi licence holders will not be slashed by tax, as furious drivers protest their payouts could be further cut.
As Melbourne cabbies began receiving their cheques this week, former Victorian premier Jeff Kennett slammed the Andrews government over its management of the taxi industry transition.
The government is acquiring taxi licences as part of its transition assistance package, legislated last month, which will establish a single registration system for taxis, hire cars and ride-share services such as Uber. The $494 million package is to be funded by a $1 levy on taxi and Uber trips.
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.
Mr Kennett said the “terrible process” could have been avoided had the government framed the legislation properly. “It is not payment for income, it is payment for the value of the licence,” he said. “It is grossly unfair and the losses felt by the licence owners, 5000 all up, it’s already quite profound.

“I don’t argue the government haven’t got the right to change the legislation, but if they do that, they have to offer a proper price. The government has no appreciation of how these licences are used for mortgages, and now banks are saying they are worthless.”

Victoria’s Public Transport Minister Jacinta Allan revealed yesterday her office had written to the Treasurer seeking help to ensure the payments were not taxed. “Our legislation makes it very clear that financial assistance is being provided … due to structural reforms and the payments should not be taxed,” a spokesman said.
Taxi driver Greg Schmidt, who bought his licence for $513,000 in November 2010, was expecting his payment this week but worried a tax slug would reduce it further.

“In my opinion, the $100,000 should not be taxed. If it’s $100,000, the tax on that could easily be $40,000. Either way, tax or no tax, $100,000 is a joke — it’s a problem,” he said. “I did not buy these plates to make a quick buck. It’s a business. It was a licence to work.”

Mr Schmidt, 51, said the licence had been part of his retirement plan. “I was hoping of working for about 10 or 15 years then retiring.

“We don’t have super or a scheme for retirement. Unfortunately that is not true anymore.”

The latest market value for a taxi licence in Victoria, in September last year, was $165,000

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