Private ruling: Assessability of income
Published: October 2014
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Is the Disability Income Crisis Recovery Benefit payment you received assessable? | A1: No.


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

Reasons for decision: Summary: The assessable income of an Australian resident includes ordinary income and statutory income derived directly or indirectly from all sources, in or out of Australia, during the income year (subsection 6-5(2) and subsection 6-10(2) of the Income Tax Assessment Act 1997 (ITAA 1997)). Ordinary income is not clearly defined in the legislation and therefore the courts have identified a number of factors that indicate whether an amount has the character of income according to ordinary concepts. It has been determined that a frequent characteristic of income receipts is an element of periodicity, recurrence or regularity ( Federal Commissioner of Taxation v. Dixon (1952) CLR 540; (1952) 10 ATD 82). Other characteristics of income that have evolved from case law also include receipts that: • are earned • are expected, and • are relied upon. Statutory income is not ordinary income but is included in assessable income by a specific provision in the tax legislation (subsection 6-10(2) of the ITAA 1997). In your case, the payment you received is not ordinary income and is not statutory income. Therefore, the money you received is not assessable.

Relevant facts: You hold an income protection policy which has Crisis Recover standalone component. | As the result of a medical crisis, you received a lump sum payment under the crisis component. | None of the payment related to income protection.