Private ruling: Assessable Income - industry assistance payments
Date of advice: 21 August 2017
Published: December 2017
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are the industry assistance payments you have received, assessable income? | A1: Yes.

Relevant facts and circumstances: As an eligible licence owner you have received a one-off transitional assistance payment as well as a hardship payment. Your licence has not been cancelled as a result of receiving these payments.

Relevant legislative provisions: Income Tax Assessment Act 1997 , subsection 6-5(1)

Reasons for decision: Summary: As a result of industry transport reforms the State Government developed an industry assistance package for those affected by the reforms. The package included the payment of one-off transitional assistance payments to help transition the new regulatory arrangements together with payments from a hardship fund that applied to eligible licence holders meeting certain criteria including a means-test. Under the reforms you have applied for and received both payments. Subsection 6-5(1) of the Income Tax Assessment Act 1997 provides that assessable income includes income according to ordinary concepts (ordinary income). The characteristics of ordinary income have been developed by case law and generally fall into three categories: ′ income from providing personal services, or ′ income from property, or ′ income from carrying on a business. Taxation Ruling TR 2006/3 Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business , provides guidance to determine the taxation consequences of receiving payments in the circumstances that you have described. In summary, the Ruling explains that where a government payment is made to an industry to assist businesses within that industry to continue operating or to compensate for loss of income, the payment is assessable income of the recipient. The Ruling also explains that a government payment will only be taken to be capital in nature where the payment requires licence holders to give up or sell their licence or otherwise bring their business or income-earning activity to an end. Importantly, these outcomes are not a requirement of the reform payments that have been made by the State Government. For these reasons the payments are assessable as ordinary income in the year in which it is derived.