ATO Interpretative Decision
ATO ID 2001/327
Income Tax
Lump sum payment received for removal of motor vehicle from remuneration packageFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a lump sum payment received by a taxpayer for the removal of a motor vehicle from a remuneration package assessable income under subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes, a lump sum payment received by a taxpayer for the removal of a motor vehicle from a remuneration package is assessable income under subsection 6-5(1) of the ITAA 1997.
Facts
The taxpayer's employer removed a motor vehicle from the taxpayer's remuneration package. The motor vehicle had been supplied to the taxpayer during previous years as a fringe benefit.
After the taxpayer's employment was terminated the taxpayer successfully recovered the fringe benefits tax value of the motor vehicle from the former employer.
The taxpayer received the fringe benefits tax value of the motor vehicle as a lump sum payment from which an amount of tax had been withheld under section 12-35 of Schedule 1 of the Taxation Administration Act 1953.
Reasons for Decision
An employee's remuneration package may include salary, wages or fringe benefits provided by the employer.
Salary or wages are considered to be income according to ordinary concepts under subsection 6-5(1) of the ITAA 1997 and are therefore assessable income.
Income provided in the form of fringe benefits, as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), is not assessable income and is not exempt income under subsection 23L(1) of the Income Tax Assessment Act 1936 (ITAA 1936).
Section 11-55 of the ITAA 1997 lists fringe benefits under subsection 23L(1) of the ITAA 1936 as non-assessable non-exempt income. Subsection 6-15(3) of the ITAA 1997 provides that if an amount is non-assessable non-exempt income it is not assessable income.
The definition of fringe benefit under subsection 136(1) of the FBTAA specifically excludes a payment of salary or wages.
The taxpayer received a lump sum payment representing the fringe benefits tax value of the motor vehicle that was excluded from the remuneration package. As this fringe benefit entitlement was satisfied by the payment of cash, the payment is considered to be salary or wages and is therefore assessable income under subsection 6-5(1) of the ITAA 1997.
Amendment History
| Date of amendment | Part | Comment |
|---|---|---|
| 8 January 2014 | Reason for Decision | Update reference to subsection 23L(1) of ITAA 1936
Include reference to section 11-55 of ITAA 1997 |
| Legislative References | Replace reference to subsection 6-15(2) of ITAA 1997 with subsection 6-15(3)
Include reference to section 11-55 of ITAA 1997 |
Legislative References:
Income Tax Assessment Act 1997
subsection 6-5(1)
subsection 6-15(3)
section 11-55
subsection 23L(1) Fringe Benefits Tax Assessment Act 1986
subsection 136(1) Taxation Administration Act 1953
section 12-35 of Schedule 1
Keywords
Income
Salary or wage income
Salary sacrifice
Fringe benefits
Car remuneration package
FBT salary packaging
FBT motor vehicle
FBT car
ISSN: 1445-2782
| Date: | Version: | |
| 23 July 2001 | Original statement | |
| You are here | 8 January 2014 | Updated statement |