Private ruling: Assessable income- grant
Published: November 2012
Ruling period: Year ended 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the grant paid by the government considered assessable income? | A1: Yes

Relevant facts and circumstances: You are a professional. You qualified for and receive a government grant. The government makes a daily payment for a prescribed maximum number of days per annum for procedure up-skilling for professionals. The grants are available to those who work in rural or remote areas. The grant is to assist with the costs of skills maintenance and up-skilling training courses and other expenses to professionals who provide certain services in rural and remote areas. You are not provided with a payment summary.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 15-2

Reasons for decision: Summary: There are a number of provisions that deal with what constitutes assessable income. The most applicable provision to your circumstance is section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997) which includes in a person's assessable income all allowances provided in respect of, or for or in relation directly or indirectly to, any employment. Taxation Ruling TR 92/15 discusses what would constitute an 'allowance'. Generally a payment is an allowance when it is a definite predetermined amount paid to cover an estimated expense. The grant you received is considered to be an allowance. It is paid at a fixed rate per day and is intended to cover various expenses associated with professional development activities. Section 15-2 of the ITAA 1997 would therefore apply if it could be concluded that the grant was paid in relation directly or indirectly to employment. The leading cases in connection with this question are Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540; (1952) 5 AITR 443; (1952) 10 ATD 82 and Scott v. Federal Commissioner of Taxation (1966) 117 CLR 514; (1966) 10 AITR 367; 14 ATD 286. In both cases it was decided that the phrase 'an indirect consequence of employment' was not an open ended concept. Rather, there must still be a connection between the payment and the employment such that the receipt 'is in a relevant sense a product' of the employment. Although the grant was not paid to you by your employer, it is considered the grant was paid in relation to your employment. The grant is targeted at a particular employment group and is intended to support the maintenance and development of the professional skills of person's within that group. That is, if it were not for your employment as a professional in a rural area you would not be eligible to receive the grants either as a course participant or in the capacity of trainer. This connection between the payment of the grant and your employment is sufficient to conclude that the grant is assessable income under section 15-2 of the ITAA 1997.

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