ATO Interpretative Decision

ATO ID 2003/512

Income Tax

Assessable Income: Volunteer Firefighters Emergency and General Assistance payment
FOI status: may be released
  • This document has changed over time. View its history.

Status of this decision: Decision Current
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 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)?

Decision

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.

Facts

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; [1952] 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; [1989] 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.

Amendment History

Date of Amendment Part Comment
24 March 2016 Throughout ATO ID Replaced:

Fire Fighter(s) with Firefighter(s)
fire fighter(s) with firefighter(s)
fire fighting with firefighting

Reasons for decision Inserted medium neutral citation for case reference
Case references Inserted medium neutral citation

Date of decision:  13 June 2003

Year of income:  Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   section 6-5
   subsection 6-5(1)

Case References:
Taxation, Federal Commissioner of v. Dixon
   (1952) 86 CLR 540
   [1952] HCA 65
   (1952) 5 AITR 443
   (1952) 10 ATD 82

Taxation, Federal Commissioner of v. Inkster
   (1989) 24 FCR 53
   [1989] 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

Keywords
Income
Income support payments

Siebel/TDMS Reference Number:  3515441; 1-7P4Y8OI

Business Line:  Small Business/Individual Taxpayers

Date of publication:  4 July 2003

ISSN: 1445-2782

history
  Date: Version:
  13 June 2003 Original statement
You are here 24 March 2016 Updated statement