Private ruling: Assessable income - repaid amounts
Date of advice: 5 July 2018
Published: September 2018
Ruling period: Income year ending 30 June 20xx.
Date scheme commenced: 1 July 20xx.

Ruling: Q1: Will the Government payments you will repay be assessable income under Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: You operate a business and receive payments from a Government Department (Government payments). You included $XXX,XXX of Government payments in your 20xx-xx income tax return. Your records were audited for the period 1 July 20xx to 30 June 20xx (the Review Period) when it was determined that you had inappropriately claimed Government payments during the Review Period and that you must repay $XXX,XXX of the Government payments. You entered into an agreement for the repayment of the $XXX,XXX. You proposed an instalment plan in relation to the repayment of the $XXX,XXX, but the Government Department did not agree to it. You have made a number payments and at this point and still have $XXX,XXX of the Government payments to repay.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5

Reasons for decision: Summary: In this case you claimed Government payments which you included in your 20xx-xx income tax return. As a result of an audit it was determined that you had inappropriately claimed Government payments and must repay $XXX,XXX in relation to the overpaid Government payments. Based on the information provided it is not viewed that you had not derived and were entitled to receive the $XXX,XXX of Government payments you inappropriately claimed. The $XXX,XXX you must repay is not considered to be income according to ordinary concepts contained in section 6-5 of the ITAA 1997, and is therefore not assessable income. We consider that Taxation Determination TD 2008/9 is applicable to your situation. Note: The $XXX,XXX does not have to be fully repaid before you can request an amendment to your 20xx-xx assessment to reduce your assessable income by the amount of $XXX,XXX.