Private ruling: Taxation of grant
Published: June 2012
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Are your payments received through a government training support program taxable? | A1: Yes

Relevant facts and circumstances: You are an employee and you received a government training grant. You are employed by a public authority and this is where you will are undertaking the on-the-job training which runs for 12 months. You received a payment in 2012 when you were accepted into the program and you will receive a further payment when you complete the training. You also receive an ongoing salary from your employer.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 6-5 (1) | Income Tax Assessment Act 1997 subsection 6-15 (2) | Income Tax Assessment Act 1997 section 6-20

Reasons for decision: Summary: Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes income according to ordinary concepts, which is called ordinary income. Relevant factors in determining whether a payment is ordinary income include whether the payment is for services rendered, such as from personal services, and the character of the payment in the hands of the recipient. Taxation Ruling IT 2639 defines income from personal services as income that a taxpayer earns predominantly as a direct reward for his or her personal efforts by, for example, the provision of services, exercise of skills or the application of labour. Other characteristics of income that have evolved from case law include receipts that: · are earned · are expected · are relied upon, and · have an element of periodicity, recurrence or regularity. The payment you received under the grant is not income from personal services. However the payment is earned, as you have to undertake the training to receive the payment, and it is also expected and relied upon as you had to apply for it. The payment also has an element of periodicity, recurrence or regularity, in respect that the payments are paid at the start and the end of the training. The character of the payment is of ordinary income under subsection 6-5(1) of the ITAA 1997. Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income, it is not assessable income. Under section 6-20 of the ITAA 1997 an amount of ordinary income is exempt income if it is made exempt from income tax by a provision of the ITAA 1997 or another Commonwealth law. The payment you are receiving is not made exempt from income tax by any legislation. Therefore, the payment you received is assessable income under subsection 6-5(1) of the ITAA 1997.

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