ATO Interpretative Decision
ATO ID 2002/1108
Income Tax
Income: Ordinary concepts - levies collected for repairs and improvements to sale yardsFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Are levies collected by the taxpayer from livestock producers included in the taxpayer's assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. The levies are included in the assessable income of the taxpayer in accordance with section 6-5 of the ITAA 1997 as ordinary income.
Facts
The taxpayer is an association of stock and station agents.
The taxpayer manages and operates the local sale yards, which are owned by the local council.
The taxpayer imposed a levy on livestock producers who use the sale yards to sell their livestock. The levy was initiated by the taxpayer and is payable by the sellers of the livestock. The levy is based upon the number of livestock that each livestock producer puts through the sale yards. The levies are payable on a regular basis through out the year.
The money received from the levy is used by the taxpayer to maintain, repair and improve the sale yards. The taxpayer has complete discretion on when and how to apply the money for the benefit of the sale yards.
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.
Characteristics of what is ordinary income have evolved from case law and 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 receives the levies from livestock producers on a regular basis throughout the income year. The levy is received or earned in return for providing a service to the livestock producers (i.e. managing and operating the sale yards). The levies are relied upon by the taxpayer in order to maintain the sale yards.
Consequently, the levies have the characteristic of income according to ordinary concepts. Accordingly they are ordinary income and are included in the taxpayer's assessable income under section 6-5 of the ITAA 1997.
Date of decision: 23 September 2002Year of income: Year ended 30 June 2000 Year ended 30 June 2001 Year ended 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004
Legislative References:
Income Tax Assessment Act 1997
section 6-5
Keywords
Income
Association & membership expenses
Repairs & maintenance expenses
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 23 September 2002 | Original statement |
| 8 October 2010 | Archived |
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