ATO Interpretative Decision
ATO ID 2003/512
Income TaxAssessable Income: Volunteer Firefighters Emergency and General Assistance payment
FOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Is an Emergency and General Assistance payment made to a taxpayer under the Volunteer Firefighters Assistance package included in assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Yes. An Emergency and General Assistance payment made to a taxpayer under the Volunteer Firefighters Assistance package is included in assessable income under section 6-5 of the ITAA 1997 as it was paid as compensation to replace lost income.
Ex gratia payments were made by the Department of Family and Community Services, through Centrelink, under a Volunteer Firefighters Assistance Package.
These payments were made as Emergency and General Assistance payments and were paid at the rate of $160 per day. They were paid to compensate volunteer firefighters for the loss of income they sustained while fighting bushfires in New South Wales.
The payments were made to those firefighters who met the following criteria:
- they were a member of a recognised firefighting organisation
- they suffered a loss of income while fighting the fires , and
- they fought the fires during the 'declared period' of 24 December 2001 to 16 January 2002.
The taxpayer was a volunteer firefighter who met these criteria and received an Emergency and General Assistance payment from Centrelink.
Reasons for Decision
Subsection 6-5(1) of the ITAA 1997 provides that a taxpayer's assessable income includes income according to ordinary concepts, which is called ordinary income.
Ordinary income has been held by the courts to include income from the rendering of personal services, income from property and income from carrying on a business.
An amount paid to compensate for loss generally acquires the character of that for which it is substituted (Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540;  HCA 65; (1952) 5 AITR 443; (1952) 10 ATD 82). Compensation payments which are paid to substitute income have been held by the courts to be income (Federal Commissioner of Taxation v. Inkster (1989) 24 FCR 53;  FCA 423; 89 ATC 5142; (1989) 20 ATR 1516, Tinkler v. FC of T (1979) 10 ATR 411; 79 ATC 4641 and Case Y47 91 ATC 433; Case 7328 (1991) 22 ATR 3422).
As an Emergency and General Assistance payment made under the Voluntary Firefighters Assistance package is paid as compensation to replace income, the payment acquires the character of income.
Accordingly, a Voluntary Firefighters Assistance payment is ordinary income and is therefore assessable under section 6-5 of the ITAA 1997.
|Date of Amendment||Part||Comment|
|24 March 2016||Throughout ATO ID||Replaced:
|Reasons for decision||Inserted medium neutral citation for case reference|
|Case references||Inserted medium neutral citation|
Year of income: Year ended 30 June 2002Taxation, Federal Commissioner of v. Inkster
(1989) 24 FCR 53
 FCA 423
89 ATC 5142
(1989) 20 ATR 1516 Tinkler v Federal Commissioner of Taxation
79 ATC 4641
(1979) 10 ATR 411 Case Y47
91 ATC 433 AAT Case 7328
(1991) 22 ATR 3422
Income support payments