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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012285230122

Ruling

Subject: Income- back payment of income

Question

Is the back payment of income assessable in the year of receipt?

Answer:

Yes.

This ruling applies for the following period

Year ended 30 June 2012

The scheme commenced on:

1 July 2011

Relevant facts

You received a back payment of income.

You were issued with a payment summary.

The payment related to an earlier income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5.

Income Tax Assessment Act 1997 subsection 6-5(2).

Income Tax Assessment Act of 1936 section 159ZR

Income Tax Assessment Act of 1936 section 159ZRD

Reasons for 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:

In your case while the payment relates to earlier period of entitlement, the Commissioner has no discretion to include the income in earlier income years. Therefore, the payment you received is included in your assessable income under section 6-5 of the ITAA 1997 in the income year when the amount was received.


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