Private ruling: Income - councillor allowance
Date of advice: 20 February 2026
Published: 7 April 2026
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the councillor allowance paid to you as a member of council assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 ? | A1: Yes.

Relevant facts and circumstances: 1. You served as a Member of Council and the Mayor during the 20XX to 20XX income years. 2. You received an allowance during the time you served and a Member of Council and the Mayor. 3. You received the allowance monthly with no tax withheld from the allowance. 4. You reported the allowance received in your tax returns under Item 24 'Other Income' for the 20XX to 20XX income years. You have not yet lodged a tax return for the 20XX income year. 5. On DD MM YYYY, you finished with the council following council election results.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 6-5 (2) | Taxation Administration Act 1953 section 446-5

Reasons for decision: Summary: The councillor allowance paid to you as a member of council is assessable under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) . | Detailed Reasoning - Detailed reasoning: According to section 446-5 of the Taxation Administration Act 1953 , a person who holds office as a member of a local government council is not an employee of the council, except where the council has passed a unanimous resolution to be treated as such and has notified the Commissioner accordingly. However, this does not mean that allowances paid to a member of a local governing body are not considered to be ordinary income under the general accessibility provisions in section 6-5 of the ITAA 1997. Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. For individual taxpayers, most of the income you earn will be assessable income. As per the Individuals tax return and instructions 2025 (NAT 2541), among other things, assessable income you must declare include payments for your services. In MIM Holdings Ltd v. Commissioner of Taxation 97 ATC 4420; (1997) 36 ATR 108 Justices Northrop, Hill and Cooper, relying on Hayes and Reuter v. FC of T 93 ATC 5030; (1993) 24 ATR 527 said that 'amounts paid in consideration of the performance of services will almost always be income'. In Hayes , the High Court considered two factors as relevant in determining whether an amount is a product of the taxpayer's services (that is, paid in consideration of the performance of services): • whether there is an expectation to receive the amount by the taxpayer, and • the motive of the payer in paying the amount. In your case, you can expect to receive the monthly councillor allowance that you were entitled to in return for the services you performed as an elected member for the council and the motive of the local government was to remunerate you for your performance of council duties, the allowance amount is a product of your services and is ordinary income. Also, the allowance you received is not exempt ordinary or statutory income under section 11-15 of the ITAA 1997. Therefore, the councillor allowance you received is fully assessable to you under subsection 6-5(2) of the ITAA 1997.