Private ruling: Whether a grant is assessable income
Date of advice: 1 March 2017
Published: May 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Is the grant received from the Relevant Account by the entity a non-assessable, non-exempt mining payment under section 59-15 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: The entity successfully applied for, and obtained, a grant which is to be used for a certain project. The grant documentation states that the grant was made under section 64(4) of the Relevant Act 1976 and was made from the Relevant Account to or for the benefit of specific people living in the State A. It is stated on the Australian Government website that in relation to the Account “The account is funded by payments from the Commonwealth equivalent to the value of royalties paid by mining interests on the land in State A”.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 59-15 | Income Tax Assessment Act 1936 subsection 128U(1)

Reasons for decision: Summary: Division 59 of the Income Tax Assessment Act 1997 (ITAA 1997) discusses particular amounts of non-assessable non-exempt income. There are two mining payments which are non-assessable and non-exempt income under subsection 59-15(1) of the ITAA 1997. One of those payments is a mining payment made to one or more specific persons, or applied for their benefit. The term “mining payment” is defined under subsection 128U(1) of the Income Tax Assessment Act 1936 (ITAA 1936). It states in part, a mining payment means a payment made to or applied for the benefit of a specific person or persons on or after the day that the Financial Management Legislation Amendment Act 1999 commenced by the Commonwealth in respect of a debit from the Account to the extent that the payment represents an amount credited to the Account in pursuance of subsection 63(1) or (4) of the Relevant Act 1976 . Subsections 63(1) and (4) of the Relevant Act 1976 refer to the crediting of mining royalty equivalents to the Account. In this case, according to the grant documentation: ● the grant was made under subsection 64(4) of the Relevant Act 1976 ; and ● the grant is being made from the Account to or for the benefit of specific people living in State A . The grant is a mining payment as it was applied for the benefit of specific persons and was made from the Account out of mining royalty equivalents. As the conditions under paragraph 59-15(1)(b) of the ITAA 1997 have been met the full grant payment is not assessable income nor is it exempt income.