Class Ruling CR 2015/76
Date of effect: 1 July 2015

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provision(s) 2. The relevant provisions dealt with in this Ruling are: All legislative references in this Ruling are to the ITAA 1997 unless otherwise indicated. Class of entities 3. The class of entities to which this Ruling applies are individuals who are awarded (recipients) the Sidney Myer Creative Fellowships (fellowships) by the Trustee of the Sidney Myer Fund (SMF). Qualifications 4. The Commissioner makes this Class Ruling based on the precise scheme identified in the Class Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 22 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then:

Class of entities or scheme: 3. The class of entities to which this Ruling applies are individuals who are awarded (recipients) the Sidney Myer Creative Fellowships (fellowships) by the Trustee of the Sidney Myer Fund (SMF). | Qualifications: 4. The Commissioner makes this Class Ruling based on the precise scheme identified in the Class Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 22 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This Ruling applies from 1 July 2015 and to all income years after its date of issue. This Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). 8. The following description of the scheme is based on information provided by the applicant. 9. The SMF is a philanthropic foundation registered as a charity with the Australian Charities and Not for Profits Commission. 10. The SMF is a charity endorsed by the Commissioner of Taxation to access the following tax concessions: 11. Each year the SMF awards fellowships to individual artists, arts managers and leaders in the humanities who have demonstrated outstanding talent and exceptional courage with respect to their artistic or cultural practice. 12. The fellowship is an unrestricted, untied cash grant of at least $200,000 that is paid to the recipient over two years in equal yearly instalments. 13. Each year the SMF awards the fellowships to between five and ten recipients nationally. 14. The fellowships are not awarded in recognition of the achievement of a task or milestone or the creation of a product. The fellowships are principally in recognition of individuals who have dedicated themselves to the generation and propagation of Australia's artistic and cultural reputation through their talent and bravery. The fellowships are a tribute to excellence and innovation made by recipients. 15. Artists and cultural creators (which includes arts managers such as curators of galleries and museums, events producers, presenters and festival directors) are eligible for nomination. 16. The criteria applicable to nominees for a fellowship are: 17. The selection process is a competitive one and not all nominations are successful. 18. The assessment of the merit of the nominations for the fellowships is made by a rotating panel of national experts referred to as the 'National Peer Review Panel' (the panel) who judge nominees' submissions by the following two criteria: 10. The fellowships are awarded annually, usually in or about September each year. 20. There are no conditions attached to how the cash grant is spent by the recipients. 21. The fellowships are not paid in relation to, or for any services or benefits provided by the recipients to any person or organisation, including the SMF and any entities associated with these entities. 22. The following documents, or relevant parts of them form part of and are to be read with the description: 23. The fellowships awarded by the SMF do not form part of the recipient's assessable income under either section 6-5, section 6-10 or section 15-2. Commissioner of Taxation 30 September 2015 24. A payment or other benefit received by a taxpayer is included in assessable income if it is: | Ordinary income: 25. Subsection 6-5(1) provides that an amount is included in assessable income if it is income according to ordinary concepts (ordinary income). 26. The legislation does not provide specific guidance on the meaning of income according to ordinary concepts. However, a substantial body of case law exists which identifies likely characteristics. The courts have also established that consideration of the whole of the circumstances is necessary. The following factors are relevant in determining whether or not the fellowship is income according to ordinary concepts: 27. The fellowships are awarded to the recipients past the early stage of their careers in recognition of their dedication to the generation and propagation of Australia's artistic and cultural reputation and in so doing have demonstrated outstanding talent and exceptional courage with respect to their artistic field or creative practice. 28. The recipients do not receive the fellowships in connection with any employment or services rendered. Further, the eligibility criteria make it clear that the fellowships are not awarded in recognition of the achievement of a task or milestone or the creation of a product. 29. The fellowships are made voluntarily by the SMF and the recipients are unable to nominate themselves. 30. The nominee's personal circumstances, such as whether they are suffering financial hardship, are not considered by the panel. As the fellowships are paid in addition to the recipients regular income it is accepted that the fellowships are not relied upon by the recipients for their regular maintenance. 31. The fellowship is not received because of, or in relation to, the recipient's employment. That is, it is not a common incident of the recipient's occupation, it is made voluntarily by the SMF, it is not solicited by the recipient and it cannot be traced to any services rendered by the recipient. 32. In view of all of these circumstances it is accepted that the fellowships are not ordinary income of the recipients and do not form part of the recipients' assessable income. | Statutory income: 33. Section 6-10 includes in assessable income amounts that are not ordinary income. These amounts are statutory income. A list of the statutory income provisions can be found in section 10-5. That list includes a reference to 15-2. 34. Subsection 15-2(1) provides that: 35. The main issue to consider with respect to subsection 15-2(1) is whether the fellowship grant is '...provided to you in respect of ...any employment of or services rendered...'. The fellowship is not a product of the recipient's employment. Rather it is a reward for the recipient's talent and courage in their relevant artistic field or creative practice. However, subsection 15-2(1) also includes in assessable income those allowances etc, which are paid in respect of services rendered. 36. The fellowship does not require any specific outcomes. There is no agreement or expectation that recipients provide or supply services to the SMF. Recipients are required to meet two criteria, outstanding talent and exceptional courage. These criteria do not amount to the rendering of services to the SMF. As such the fellowships are not assessable under section 15-2 because the payment is not provided to the recipients in respect of any employment or for services rendered by the recipient. 37. The following is a detailed contents list for this Ruling: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Ruling: 23. The fellowships awarded by the SMF do not form part of the recipient's assessable income under either section 6-5, section 6-10 or section 15-2. Commissioner of Taxation 30 September 2015


Appendix: 24. A payment or other benefit received by a taxpayer is included in assessable income if it is: | Ordinary income: 25. Subsection 6-5(1) provides that an amount is included in assessable income if it is income according to ordinary concepts (ordinary income). 26. The legislation does not provide specific guidance on the meaning of income according to ordinary concepts. However, a substantial body of case law exists which identifies likely characteristics. The courts have also established that consideration of the whole of the circumstances is necessary. The following factors are relevant in determining whether or not the fellowship is income according to ordinary concepts: 27. The fellowships are awarded to the recipients past the early stage of their careers in recognition of their dedication to the generation and propagation of Australia's artistic and cultural reputation and in so doing have demonstrated outstanding talent and exceptional courage with respect to their artistic field or creative practice. 28. The recipients do not receive the fellowships in connection with any employment or services rendered. Further, the eligibility criteria make it clear that the fellowships are not awarded in recognition of the achievement of a task or milestone or the creation of a product. 29. The fellowships are made voluntarily by the SMF and the recipients are unable to nominate themselves. 30. The nominee's personal circumstances, such as whether they are suffering financial hardship, are not considered by the panel. As the fellowships are paid in addition to the recipients regular income it is accepted that the fellowships are not relied upon by the recipients for their regular maintenance. 31. The fellowship is not received because of, or in relation to, the recipient's employment. That is, it is not a common incident of the recipient's occupation, it is made voluntarily by the SMF, it is not solicited by the recipient and it cannot be traced to any services rendered by the recipient. 32. In view of all of these circumstances it is accepted that the fellowships are not ordinary income of the recipients and do not form part of the recipients' assessable income. | Statutory income: 33. Section 6-10 includes in assessable income amounts that are not ordinary income. These amounts are statutory income. A list of the statutory income provisions can be found in section 10-5. That list includes a reference to 15-2. 34. Subsection 15-2(1) provides that: 35. The main issue to consider with respect to subsection 15-2(1) is whether the fellowship grant is '...provided to you in respect of ...any employment of or services rendered...'. The fellowship is not a product of the recipient's employment. Rather it is a reward for the recipient's talent and courage in their relevant artistic field or creative practice. However, subsection 15-2(1) also includes in assessable income those allowances etc, which are paid in respect of services rendered. 36. The fellowship does not require any specific outcomes. There is no agreement or expectation that recipients provide or supply services to the SMF. Recipients are required to meet two criteria, outstanding talent and exceptional courage. These criteria do not amount to the rendering of services to the SMF. As such the fellowships are not assessable under section 15-2 because the payment is not provided to the recipients in respect of any employment or for services rendered by the recipient.


What this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | [Note: This is a consolidated version of this document. Refer to the Legal Database ( ato.gov.au/law ) to check its currency and to view the details of all changes.] | Your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, or for or in relation directly or indirectly to, any employment or services rendered by you ... | Appendix 2 - Detailed contents list


Related rulings: IT 2145 TR 2006/10 CR 2002/83 CR 2007/31 CR 2011/92
Legislative references: ITAA 1997 ITAA 1997 6-5 ITAA 1997 6-5(1) ITAA 1997 10-5 ITAA 1997 15-2 ITAA 1997 15-2(1) TAA 1953
Case references: Federal Commissioner of Taxation v. Blake (1984) 75 FLR 315 84 ATC 4661 (1984) 15 ATR 1006
Other references: http://myerfoundation.org.au/grants/arts-humanities/smcf/ http://myerfoundation.org.au/grants/arts-humanities/smcf/faq/ The 2015 Sidney Myer Creative Fellowship Nomination Form