ATO ID 2001/715: Assessability of payments under the First Home Owners Grant scheme
Date of decision: 16 July 2001
Business line: Small Business/Individual Taxpayers

Issue
Is a First Home Owners Grant scheme payment received by the taxpayer assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
No. A First Home Owners Grant scheme payment received by the taxpayer is not assessable income under section 6-5 of the ITAA 1997 as it is not income according to ordinary concepts.

Facts
The taxpayer received a payment under the First Home Owners Grant scheme as an eligible first home owner.

Reasons for decision
Summary: From 1 July 2000, eligible first home owners were entitled to receive a one off payment under the First Home Owners Grant scheme, an initiative of the Commonwealth Government administered by the States and Territories. The primary purpose of the payment is to provide financial assistance to home owners in the purchase of their first home. 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. Ordinary income is income according to ordinary concepts and is generally considered to include: First Home Owners Grant scheme payments are not paid because of employment, services rendered, investment or the operation of a business. They are a one off lump sum payment and the motive of the body making the payment is to provide assistance for the purchase of a first home, not to help the recipients or their dependants pay for their regular living expenses. The payment under the scheme is not income according to ordinary concepts and therefore is not ordinary income. Accordingly, the First Home Owners Grant scheme payment will not form part of the taxpayer's assessable income under section 6-5 of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 section 6-5 subsection 6-5(2)
Case references: Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540 [1952] HCA 65
Related ATO interpretative decisions: ATOID 2010/73
Subject references: Income Ex gratia payment income Government grants income