ATO Interpretative Decision
ATO ID 2002/205
Income Tax
Income - Money received for personal expenses while residing at a collegeFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 money received by the taxpayer for personal expenses while residing at a college assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. Money received by the taxpayer for personal expenses while residing at a college is income according to ordinary concepts and assessable under section 6-5 of the ITAA 1997.
Facts
The taxpayer is an overseas student who is residing at an Australian college between the end of secondary education and the start of university.
The taxpayer undertakes various duties while at the college.
The taxpayer is provided with board and lodging and a limited amount of money for personal expenses.
The taxpayer is a resident of Australia for income tax purposes.
Reasons for Decision
Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
Ordinary income has generally been held to include 3 categories, namely, income from rendering personal services, income from property and income from carrying on a business.
Paragraph 3 of Taxation Ruling IT 2639 defines 'income from personal services' and states that:
'3. "Income from personal services" is income that an individual taxpayer earns predominantly as a direct reward for his or her personal efforts by, for example, the provision of services, exercise of skills or the application of labour. The inclusion of predominantly in this definition allows for the situation where personal services involve the use of some equipment, for example the drawing board of an architect.'
Other characteristics of income that have evolved from case law include receipts that:
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- are earned;
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- are expected;
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- are relied upon; and
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- have an element of periodicity, recurrence or regularity.
The taxpayer undertakes various duties at the college and is provided with board and lodgings and a limited amount of money for personal expenses. The taxpayer receives the money on a regular basis, is earned, expected and relied upon. The money received by the taxpayer is ordinary income and is therefore assessable income under section 6-5 of the ITAA 1997.
Date of decision: 26 September 2001
Legislative References:
Income Tax Assessment Act 1997
section 6-5
subsection 6-5(2)
Related Public Rulings (including Determinations)
IT 2639
Keywords
Salary & wages income
Employee allowances
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 26 September 2001 | Original statement |
| 23 May 2014 | Updated statement |