ATO ID 2002/944: Assessable income - food vouchers received for child-minding
Date of decision: 11 September 2002
Year of income: Year ended 30 June 2002
Business line: Small Business/Individual Taxpayers

Issue
Are the monetary values of food vouchers received by the taxpayer for child-minding the neighbour's child included in their assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
No. The monetary values of food vouchers received by the taxpayer for child-minding the neighbour's child are not included in their assessable income under section 6-5 of the ITAA 1997 as the receipts are not in the nature of ordinary income.

Facts
The taxpayer minds a neighbour's child. The child-minding generally involves supervision of the child and the provision of lunches, snacks and drinks for the child. The taxpayer also takes the child to playgroup once per week along with the taxpayer's child. The taxpayer does not mind any other children. The taxpayer's neighbour provides food vouchers for use in supermarkets, in return for the child-minding and provision of food to the child. There is no set time for the receipt of the vouchers and the value of the vouchers varies. The total value of the vouchers received are less than normal market rates payable for the provision of child minding services. The arrangement between the taxpayer and the neighbour is an informal one between friends.

Reasons for decision
Summary: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Section 21 of the Income Tax Assessment Act 1936 provides that where a transaction or payment is paid or given in a form other than cash, a taxpayer is deemed to have received the money value of that item. Ordinary income has generally been held to include 3 categories, namely, income from rendering personal services, income from property and income from carrying on a business. Paragraph 3 of Taxation Ruling IT 2639 defines 'income from personal services' and states that: '3."Income from personal services" is income that an individual taxpayer earns predominantly as a direct reward for his or her personal efforts by, for example, the provision of services, exercise of skills or the application of labour. The inclusion of predominantly in this definition allows for the situation where personal services involve the use of some equipment, for example the drawing board of an architect.' Other characteristics of income that have evolved from case law ( Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540; [1952] HCA 65; (1952) 10 ATD 82) include receipts that: It is considered that the food vouchers are gifts to the taxpayer given by the neighbour as token of appreciation for the taxpayer's help in minding the neighbour's child. Therefore, the food vouchers received by the taxpayer do not represent a regular form of receipt that could be relied on as income by the taxpayer. There is no set time for the receipt of the vouchers, the value of the vouchers varies, and the total value of the voucher's received are less than normal market rates payable for the provision of child minding services. The food vouchers received by the taxpayer do not in these circumstances have the characteristics of income according to ordinary concepts. Accordingly, the monetary values of food vouchers received for child-minding are not ordinary income and are not included in the taxpayer's assessable income under section 6-5 of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1936 section 21
Case references: Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540 [1952] HCA 65 (1952) 10 ATD 82
Related public rulings and determinations: Taxation Ruling IT 2639