ATO Interpretative Decision
ATO ID 2002/331
Income Tax
Assessability of annual leave loadingFOI status: may be released
Status of this decision: Decision Current
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 salary and wage earner assessable on an amount of annual leave loading under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. A salary and wages earner is assessable on an amount of annual leave loading under section 6-5 of the ITAA 1997.
Facts
The taxpayer is an employee who earns salary and wages.
The taxpayer received an amount of annual leave loading during the income year.
Reasons for Decision
Section 6-5 of the ITAA 1997 provides that a taxpayer's assessable income includes income according to ordinary concepts, which is called ordinary income.
Remuneration received for personal services in the capacity of employee, such as salary and wages, is considered income according to ordinary concepts. Amounts paid for annual leave including any additional payment for leave loading is also income according to ordinary concepts.
Therefore, the amount of annual leave loading is income according to ordinary concepts and is assessable under section 6-5 of the ITAA 1997.
Date of decision: 11 October 2001
Legislative References:
Income Tax Assessment Act 1997
section 6-5
Keywords
Leave bonus
Salary
Salary and wages income
Date reviewed: 3 December 2013
ISSN: 1445-2782