Financial Compensation for Holders of Taxi Owner's Permits — Tax Treatment
In the 2018-2019 Budget Speech delivered on March 27, 2018, the Minister of Finance announced a total of $250 million in financial assistance to compensate holders of taxi owner's permits for the loss in value of their permits.
If you have one or more of these permits, you received (or will receive) an amount of compensation calculated on the basis of the loss in value determined for your taxi servicing area. Since the compensation is considered a form of government assistance for income tax purposes, you will receive an RL-27 slip for it for 2018. The slip will be issued by February 28, 2019.
For more information, see Programme d'aide financière à la modernisation des services de transport par taxi on the Ministère des Transports, de la Mobilité durable et de l'Électrification des transports website (French only).
For tax purposes, taxi owner's permits are considered depreciable property. Since the compensation offsets the loss in your permit's value, it reduces both the capital cost of the permit and the undepreciated capital cost (UCC) for the permit's class of property.
Note that reducing the permit's capital cost may increase your capital gain if you sell the permit. Half of the gain will be taxable in the year of the sale.
Likewise, reducing the UCC will reduce the capital cost allowance (CCA) you can claim in respect of your permit in the future. Also, if the compensation you received is greater than the UCC for the class of property, reducing the UCC may result in CCA recpature at the end of the year you received the compensation.