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Edited version of private ruling
Authorisation Number: 1011527507801
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Ruling
Subject: Derivation of income - assessability
Are you assessable on a payment for unused leave in the year in which it is received?
Yes.
This ruling applies for the following period:
Year ended 30 June 2010
The scheme commenced on:
1 July 2009
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You resigned from your employment in mid 2010.
You expected your payment for unused leave was to be paid in the 2011 financial year.
You received your 2010 payment summary with these amounts included.
According to your bank statement the payment appeared in your account in June 2010.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
In determining the basis of derivation of income, paragraph 42 of Taxation Ruling 98/1 states that:
Income from employment would normally be assessable on a receipts basis. Salary, wages or other employment remuneration are assessable on receipt even though they relate to a past or future income period.
When you resigned from your employment you were paid an amount in relation to unused leave, this amount relates to past and future leave entitlements. As income from employment is assessable on a receipts basis the amount you received is assessable to you on the date which you received it. According to your bank statement you received the amount in your account in June 2010, therefore the amount is assessable to you in the 2010 financial year.
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