Private ruling: Contract Early Termination Payment
Date of advice: 10 December 2015
Published: February 2016

Ruling: Q1: The ruling concerned whether a payment to the entity for the termination of a contract was assessable income for the purposes of section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997). | A1: The Commissioner ruled that the payment was not assessable income according to ordinary concepts under section 6-5 of the ITAA 1997. | Q2: The ruling concerned whether a payment to the entity for the termination of a contract was an assessable recoupment under section 20-20 of the ITAA 1997? | A2: The Commissioner ruled that the payment was not an assessable recoupment under section 20-20 of the ITAA 1997. | Q3: The ruling concerned whether a payment to the entity for the termination of a contract was a bounty or subsidy under section 15-10 of the ITAA 1997. | A3: The Commissioner ruled that the payment was not a bounty or subsidy under section 15-10 of the ITAA 1997. | Q4: The ruling concerned whether a payment to the entity for the termination of a contract was an indemnity for loss of assessable income under section 15-30 of the ITAA 1997. | A4: The Commissioner ruled that the payment was not an indemnity for loss of assessable income under section 15-30 of the ITAA 1997. | Q5: The ruling concerned whether a payment to the entity for the termination of a contract will be included in a balancing adjustment under Division 40 of the ITAA 1997. | A5: The Commissioner ruled that the payment is not included in a balancing adjustment under Division 40 of the ITAA 1997. | Q6: The ruling concerned whether a payment to the entity for the termination of a contract is capital proceeds for the purposes of a CGT event. | A6: The Commissioner ruled that the payment is capital proceeds for the purposes of a CGT event C2 under section 104-25 of the ITAA 1997.




Subject: Contract Early Termination Payment: The entity received a payment for the early termination of a contract.