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

Ruling: Q1: Is the payment you received assessable income? | A1: Yes.

Relevant facts and circumstances: You underwent a medical procedure. You applied for a government scheme. The scheme provides a payment for employers, to be passed on in the form of paid leave to employees who are unable to work for a period of time. You received a payment from the scheme.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2)

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes income according to ordinary concepts (ordinary income) derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Payments of salary or wages and payments that replace salary or wages are income according to ordinary concepts and are included in assessable income under section 6-5 of the ITAA 1997 ( Federal Commissioner of Taxation v. Inkster (1989) 24 FCR 53; 89 ATC 5142, (1989) 20 ATR 1516)). In your case, you received an income replacement payment under the government scheme. The purpose of this scheme is to provide you with income when you are unable to work. Therefore, your payment has the characteristics of ordinary income and the payment is assessable under subsection 6-5(2) of the ITAA 1997.