| Disclaimer This edited version has been archived due to the length of time since original publication.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. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012328674906
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Incentive Program payments
Question:
Do payments received under the Incentive Program form part of your assessable income?
Answer:
Yes
This ruling applies for the following periods
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on
1 July 2012
Relevant facts and circumstances
You are a medical practitioner.
You participate in a program which aims to link specialists and consultant physicians with patients in remote, regional and outer metropolitan areas, and in eligible aged care facilities throughout Australia.
As part of the program, medical practitioners are eligible to receive various incentive payments which are paid in addition to the Medicare benefit for the service provided.
A payment is made to encourage eligible practitioners to adopt Incentive Program X as part of their normal practice. It is paid on the first occasion a Medicare Benefit is paid for a program Medicare Benefits Schedule (MBS) item billed against a practitioner's provider number.
For a service provided during the 2011-12 financial year, this payment was a one-off payment.
A further payment is an ongoing payment based on the number of program consultations hosted by the practitioner during a quarterly period. The incentive accrues each time a Medicare benefit is processed for a program MBS item and a single payment is paid quarterly.
A further payment is an ongoing payment based on the number of time a practitioner bulk bills a program service. The incentive accrues during a quarterly period and is paid in a single payment each quarter.
During the 2012-13 financial year you received payments.
You will continue to receive payments whilst the Program operates.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2).
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources during the income year.
Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business.
Based on case law, it can be said that ordinary income generally includes receipts that:
· are earned
· are expected
· are relied upon, and
· have an element of periodicity, recurrence or regularity.
A government payment that provides income support for businesses or paid to assist with business operating costs is generally assessable under subsection 6-5(2) of the ITAA 1997.
In your case you received payments for providing your professional services as part of the program.
As these payments relate to the operation of your business, that is, the provision of your professional medical services, they are regarded as ordinary income. Therefore the payments are regarded as assessable income under subsection 6-5(2) of the ITAA 1997.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
