The ATO released a fact sheet outlining the tax treatment of NSW Government payments made to eligible taxi licence holders under its Point to Point Financial Assistance Scheme. The ATO confirms that the payments are not ordinary income as they are made in consideration for cancelling the taxi licence and compensating the holder for the loss of value attaching to the licence.
Any payment received should be included in the calculation of the capital gain/loss made on the cancellation of the licence. Generally, the capital gain or loss will be the difference between the cost of acquiring the licence and the consideration received in relation to its cancellation (ie the payment under the scheme). In most cases, the consideration will be based on a specific amount per licence held. If a capped amount is paid (due to holding more than 6 metropolitan Sydney licences), the ATO will accept an allocation of the scheme payments to individual licences on a reasonable basis.