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ATO Interpretative Decision

ATO ID 2003/568 (Withdrawn)

Income Tax
Assessability of financial assistance received from charitable organisations

Attention This ATO ID is withdrawn as it is no longer necessary. The ATO view expressed in this ATO ID is a straight application of the law and does not contain an interpretative decision. Guidance on the view contained in this ATO ID can be found in Assistance payments (QC 21525).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 21 July 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Issue

Is an amount of financial assistance to assist with personal hardship, received by the taxpayer from a charitable organisation, assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. An amount of financial assistance to assist with personal hardship, received by the taxpayer from a charitable organisation, is not assessable income under section 6-5 of the ITAA 1997 as it is not income according to ordinary concepts.

Facts

The taxpayer is an individual who suffered personal hardship as the result of a disaster or emergency.

The taxpayer received financial assistance from a charitable organisation.

The financial assistance is a one-off, or non-periodic, payment.

The payment is provided for personal living expenses to address immediate needs, such as food, clothing and short term accommodation that arose as a result of the disaster or emergency.

The taxpayer is not carrying on a business.

Reasons for Decision

Section 6-5 of the ITAA 1997 provides that the assessable income of a resident taxpayer includes income according to ordinary concepts (ordinary income) derived directly or indirectly from all sources.

Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business.

Other characteristics of income that have evolved from case law include receipts that:

·
 are earned
·
 are expected
·
 are relied upon, and
·
 have an element of periodicity, recurrence or regularity.

The financial assistance the taxpayer received was not earned by the taxpayer as it does not relate to personal services performed. The payment is also a one off, or non-periodic, payment and thus, it does not have the element of regularity. Although the payment may be said to be expected and relied upon, this expectation and reliance arises from personal hardship suffered as the result of a disaster or emergency, rather than from a relationship to personal services performed.

The financial assistance is not income according to ordinary concepts and therefore is not ordinary income. Accordingly, the financial assistance is not assessable under section 6-5 of the ITAA 1997.

Amendment History

Date of Amendment Part Comment
24 March 2016 Reasons for decision Updated to improve clarity

Date of decision: 16 June 2003

Year of income:Year ended 30 June 2003

Legislative references:
Income Tax Assessment Act 1997
   section 6-5

Related ATO Interpretative Decisions
ATO ID 2001/715

Keywords
Income
Ex gratia payments
Hardship relief

Siebel/TDMS reference number: 3590465; 1-7PB56OS; 1-BXBU2YR

Business line: Small Business/Individual Taxpayers

Date of publication: 11 July 2003

ISSN: 1445-2782

ATO ID 2003/568 (Withdrawn) history   Top  
   Date   Version 
   16 June 2003   Original statement   
   24 March 2016   Updated statement   
 You are here ®  21 July 2017   Withdrawn   


 


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