Private ruling: Income - PAYG (salary, wages, allowances, lump sums)
Published: October 2013
Ruling period: Year ended 30 June 2013 | 1 July 2012

Ruling: Q1: Is the grant received by you considered assessable income? | A1: Yes.

Relevant facts and circumstances: You are contracted in a location which is considered to be an outer metropolitan area and you qualified for the grant. You received $X (including GST) over two years.

Relevant legislative provisions: Income Tax Assessment Act 1997 , Section 6-5. | Income Tax Assessment Act 1997 , Section 15-2.

Reasons for decision: Summary: Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that 'Your assessable income includes income according to ordinary concepts, which is called ordinary income'. 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. An incentive bonus comes within the meaning of ordinary income. An incentive bonus is an additional reward payment derived by you in your capacity as an employee as a financial incentive to remain in your employment ( Dean & Anor v. Federal Commissioner of Taxation (1997) 78 FCR 140; (1997) 37 ATR 52; 97 ATC 4762) (Deans Case). Dean's case also found that the payment need not be paid by your employer. In your case, you received payments under the grant for undertaking your work activity in an outer metropolitan area. The payment amounts were based on your remote locality and the length of time spent practicing in that area. Even though the payments were not received as a result of you being an employee, they were received in regards to your income earning activity. The payments are considered a bonus you derive as a result of your income earning activity as they are paid to encourage you to continue working in your remote locality. Therefore, the grant is considered to be assessable income under section 6-5 of the ITAA 1997.