ATO Interpretative Decision
ATO ID 2001/417 (Withdrawn)
Income Tax
Assessable Income: NSW Department of Land and Water Conservation - Registered Property AgreementFOI status: may be released
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This ATO ID is withdrawn and is replaced by ATO ID 2005/77.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 received from the NSW Department of Land and Water Conservation (DLWC) for the protection and long term sustainable management of native vegetation assessable income?
Decision
No. The amount is not ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997).
Facts
The DLWC entered into a Registered Property Agreement (the Agreement) with a landowner to achieve long term sustainable management and protection of native vegetation. The Agreement has statutory power and formally binds the landowner to undertake certain management responsibilities. The Agreement is registered in perpetuity on the property title.
As part of the Agreement, the DLWC contributes an amount of money towards the undertaking of specific on-ground works by the landowner (that is, fencing, direct seeding and weed removal) which are designed to facilitate the conservation of native vegetation. The landowner can have this work undertaken by an arms-length contractor or can undertake the work himself or herself.
Reasons for Decision
Under the terms of the Agreement, the funding provided by the DLWC is to reimburse expenses agreed to be incurred by the landowner under the agreement.
If the landowner uses arms-length contractors to undertake the work and the cost of using the contractor is reimbursed by the DLWC, then the amount received from the DLWC is not assessable income. The landowner does not enter into the transaction to make a profit or gain, rather it is a reimbursement of costs agreed to be performed under the property agreement.
However, if the landholder undertakes the work rather than use arms-length contractors, the amount received from the DLWC would be included in assessable income as ordinary income under section 6-5 of the ITAA 1997. In this situation, any expenses related to undertaking the work would be an allowable deduction.
Date of decision: 12 September 2001
Legislative References:
Income Tax Assessment Act 1997
section 6-5
Related Public Rulings (including Determinations)
TR 92/3
TR 95/35
TR 97/3
Keywords
Income
ISSN: 1445-2782
| Date: | Version: | |
| 12 September 2001 | Original statement | |
| You are here | 11 March 2005 | Archived |