Private ruling: Taxi and Limousine Industry Assistance Scheme -
Published: September 2017
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the $20,000 received as a transitional assistance payment assessable income and reportable on your income tax return? | A1: Yes | Q2: Is the $20,000 received as a transitional assistance payment reportable in your business activity statement? | A2: No

Relevant facts and circumstances: You hold a State A taxi service licence. You applied for the transitional assistance payment by completing an approved application form and submitted it to the State A Rural Adjustment Authority You received a $20,000 lump sum transitional assistance payment in 20XX. You received the payment directly (and in full) into your bank account. No Goods and Services Tax (GST) was deducted.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 184-1 | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1 | Income Tax Assessment Act 1997 Section 6-5 | Taxi and Limousine Industry Assistance Scheme Regulation 2016

Reasons for decision: Summary: Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that assessable income includes income according to ordinary concepts (ordinary income). The characteristics of ordinary income have been developed by case law and generally fall into three categories: ● income from providing personal services, or ● income from property, or ● income from carrying on a business. As a result of the legalisation of ride-booking services, the State A Government announced an Industry Adjustment Assistance Package (IAAP) to assist the existing taxi and limousine service licence industry to transition to a more competitive market. The IAAP includes provision for transitional assistance payments of $20,000 to eligible holders of taxi service licences. You applied for and have received a transition assistance payment of $20,000 paid under the Taxi and Limousine Industry Assistance Scheme Regulation 2016 (Regulation). Taxation Ruling TR 2006/3 Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business , provides instruction to determine the nature of these government payments. In summary, the Ruling explains that where a government payment is made to an industry to assist businesses within that industry to continue operating or to compensate for loss of income, the payment is assessable income of the recipient. Moreover a government payment will not be capital in nature where the payment does not require licence holders to give up or sell their taxi licence plate or otherwise bring their business or income-earning activity to an end. For these reasons, the transitional assistance payment of $20,000 is assessable as ordinary income in the year in which it is derived. An entity for GST purposes is liable to GST if the entity makes a taxable supply - GST is payable on taxable supplies. The term 'entity' is a defined term in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and is referred to as 'you'. An entity has a liability to pay the 'net amount', broadly the GST. You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with the indirect tax zone; and (d) you are *registered, or *required to be registered. The GST Act, also requires that the supply must not be GST-free or input taxed. Some arrangements are not subject to GST because they do not involve anyone making any supply whatsoever (a key element of the definition of taxable supply is not met). Under the Regulation, the State A government offers a lump sum transitional assistance payment of $20,000 to relevant holders of relevant licences. The purpose of the financial assistance is defined in Part 3 of the Regulation: “… to assist relevant holders of relevant licences to adjust to changes in the taxi service industry and limousine service industry.” Under the Regulation, you must complete an application form and provide such documents as required to satisfy the authority that you are eligible to receive the payment. Once an application is submitted and all required supporting documents have been provided, the application will be assessed. Eligible approved applicants will receive the one-off payment. No further action is required from you. Based on this, it is understood that to receive the transitional assistance payment, you were not required to undertake any activity (other than making an application in accordance with the Regulation), or enter into any agreement to do something or refrain from doing something (for example, refrain from commencing an action against Department of Transport and Main Roads (TMR). The transitional assistance payment was paid to you once you met the eligibility criteria. In meeting the criteria under the Regulation, you did not supply any goods, services, or anything else to the State A Government (including TMR) or any other entity. Therefore, there are no GST consequences arising from the arrangement for either of the parties in regard to payment of the transitional assistance payment; you have no liability to pay GST.