ATO Interpretative Decision
ATO ID 2011/69 (Withdrawn)
Assessability of temporary living expenses grant
FOI status: may be released
||This ATO ID is withdrawn. Guidance on the issue contained in this ATO ID can be found in Assistance payments (QC 21525).
||This document has changed over time. View its history.
Status of this decision: Decision withdrawn 17 November 2017.
|CAUTION: 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Is a State Government grant, paid to assist an individual with temporary living expenses that arise as a result of a natural disaster, assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
No. A State Government grant, paid to assist an individual with temporary living expenses that arise as a result of a natural disaster, is not assessable income under section 6-5 of the ITAA 1997, as the grant is not in the nature of ordinary income.
The taxpayer is an individual who is directly affected by a natural disaster.
A State Government offers financial assistance to individuals to meet temporary accommodation and living expenses in circumstances where the individual's principal place of residence is uninhabitable as a direct result of a natural disaster.
The taxpayer applies for, and receives, the State Government temporary living expenses grant.
The temporary living expenses grant is payable up to a maximum amount per household, paid in instalments over a maximum period of 6 months.
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 temporary living expenses grant received by the taxpayer is not earned as a result of personal services performed; nor is it income from property or from carrying on a business.
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 natural disaster, rather than from a relationship to personal services performed. The financial assistance is not intended to replace or substitute income, nor can it be used to meet the ordinary costs of living.
Whilst the grant is one-off and final in the sense that the grant is payable up to a maximum amount per household per natural disaster, the method of payment may incorporate elements of periodicity. Nonetheless, regularity and periodicity is not in itself decisive in determining whether an amount is income ( Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540; (1952) 5 AITR 443; (1952) 10 ATD 82). That is, the character of a receipt in the hands of a taxpayer must be determined having regard to the 'totality of the circumstances' ( Federal Commissioner of Taxation v. Anstis (2010) 241 CLR 443; 2010 ATC 20-221; (2010) 76 ATR 735).
Having regard to all of the circumstances, the temporary living expenses grant is not income according to ordinary concepts and is not included in assessable income under section 6-5 of the ITAA 1997.
Date of decision: 5 August 2011
|Year of income:||Year ended 30 June 2011|
Income Tax Assessment Act 1997
Federal Commissioner of Taxation v. Anstis
(2010) 241 CLR 443
2010 ATC 20-221
(2010) 76 ATR 735
Federal Commissioner of Taxation v. Dixon
(1952) 86 CLR 540
(1952) 5 AITR 443
(1952) 10 ATD 82
Related ATO Interpretative Decisions
ATO ID 2003/568
ATO ID 2001/715
Disaster relief payments
Ex gratia payments
Siebel/TDMS reference number: 1-3CDCJW1
Business line: Small Business/Individual Taxpayers
Date of publication: 26 August 2011