Private ruling: General Interest Charge
Date of advice: 3 August 2016
Published: September 2016
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2014 | Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Question and answer | Are you required to include the amount you received as a remission of general interest charges (GIC) in your # assessable income? | Yes.

Relevant facts and circumstances: You incurred GIC during the #, # and # income years. You have not claimed a deduction in these years for GIC. In the 2014-15 income year you received a remission of the GIC you incurred.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-10 | Income Tax Assessment Act 1997 Section 10-5 | Income Tax Assessment Act 1997 Subdivision 20-A | Income Tax Assessment Act 1997 Section 20-20 | Income Tax Assessment Act 1997 Section 20-25 | Income Tax Assessment Act 1997 Section 20-30

Reasons for decision: Summary: Section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included in assessable income by another provision. Section 10-5 of the ITAA 1997 lists those provisions applicable to section 6-10 of the ITAA 1997 referring to assessable income. Included in that list is recoupment for certain losses and outgoings that are deductible under Subdivision 20-A of the ITAA 1997. A recoupment is defined in section 20-25 of the ITAA 1997. Subsection 20-25(2A) states that where: ● a taxpayer has incurred expenditure that consists of the GIC under Division 1 of Part IIA of the Taxation Administration Act 1953 (TAA 1953); and ● the Commissioner remits any of that GIC charge, the taxpayer is taken to have received that remitted amount as a recoupment of that expenditure. Subsection 20-20(3) of the ITAA 1997 provides that an amount received by a taxpayer is an assessable recoupment if it is deductible in a current or earlier income year under a provision listed in section 20-30 of the ITAA 1997. Item 1.3 of the table in subsection 20-30(1) of the ITAA 1997 includes tax related expenses deductible under section 25-5 of the ITAA 1997. Paragraph 25-5(1)(c) of the ITAA 1997 states that expenditure for the GIC under Division 1 of Part IIA of the TAA 1953 is a deductible tax related expense. Practice Statement Law Administration PSLA 2011/12 states that GIC is a tax deduction in the year that it is incurred. If the GIC is subsequently remitted then the taxpayer is taken to have received the remitted amount as recoupment of that expenditure and that recoupment then becomes assessable (paragraph 13). In your case you received a remission of GIC in the # income year. Therefore under section 6-10 of the ITAA 1997 the remission amount will form part of your assessable income for the # income year. | Detailed Reasoning - Additional Information:: As previously discussed, the Commissioner does not have discretion to grant you an exemption under the legislation.