Private ruling: Income assessable cash grant
Published: April 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Is the cash grant you received from a natural disaster assessable income? | A1: 

Relevant facts and circumstances: You received a cash grant due to a natural disaster.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 6-10

Reasons for decision: Summary: Your assessable income includes income according to ordinary concepts, which is called ordinary income (section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)), and statutory income (section 6-10 of the ITAA 1997). Ordinary income generally includes three categories, namely, income from rendering personal services, income from property, and income from carrying on a business. 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 cash grant you received was not earned by you as it does not relate to services performed. The payment was also a one off, or non-periodic, payment and so it does not have an element of regularity. Although the payment may be said to be expected and relied upon, this expectation and reliance arises from personal hardship suffered rather than from a relationship to services performed. As such, the cash grant you received is not ordinary income. Also, there are no specific provisions which include the cash grant in your assessable income, and therefore, the payment is not statutory income. As the payment is not ordinary or statutory income, it is not assessable income (subsection 6-15(1) of the ITAA 1997).

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