Private ruling: Income
Published: November 2013
Ruling period: Year ending 30 June 2014
Date scheme commenced: 01 July 2013

Ruling: Q1: Is the termination payment assessable to you in the 2013-14 financial year? | A1: Yes.


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

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a person, who is an Australian resident, shall include the ordinary income derived by the person from all sources during the income year. Dividends are considered to be ordinary income for the purpose of section 6-5 of the ITAA 1997. Pursuant to subsections 6-5(2) and (3) of the ITAA 1997, ordinary income is included in the assessable income of a taxpayer when it is derived by that taxpayer. Subsection 6-5(4) of the ITAA 1997 further provides that in working out whether you have derived an amount of ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct. Cheques are generally regarded as payment when received and not when presented. In your case, payment occurred in the 2013-14 year and should be declared in that year.

Relevant facts: You were dismissed from your employment in particular month 2013. | A cheque was drawn for your termination payment in June 2013 and posted to you. | You did not receive the payment in the mail until at least Monday 1 July 2013.