Private ruling: Assessable income
Published: December 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: Q1: Is salary and wage income, earned in one year and received in the next, assessable in the year it is received? | A1: Yes.

Relevant facts and circumstances: Near the end of a financial year you were employed under a contract. Due to clerical problems you were not paid until the next financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(4)

Reasons for decision: Summary: Subsection 6-5(4) of the Income Tax Assessment Act 1997 states that income is taken to have been received as soon as it is applied or dealt with in any way on your behalf or as you direct. Taxation Ruling TR 98/1 Income tax: determination of income; receipts versus earnings explains that income from employment is assessable on a receipts basis. Therefore salary and wage income is assessable when paid or received by the employee, irrespective of whether the salary is for current, past or future employment. In your case, you were employed under a contract near the end of a financial year. Due to clerical issues you were not paid until the following financial year. Consequently, as you received the income in the following financial year, the amount is assessable in the following financial year. While we appreciate your situation, there is no discretion available to the Commissioner to assess this income in a year earlier than it was received.