1012430613131 | Legal database

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This edited version has been archived due to the length of time since original publication.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: 1012430613131

Ruling

Subject: Taxation of payments to volunteer minister

Question

Are the payments you receive as a minister of religion assessable income?

Answer

Yes.

This ruling applies for the following periods

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commenced on

1 July 2012

Relevant facts and circumstances

You volunteer as a minister with a church group.

You do this as a hobby.

You preach and teach twice every week.

The church you minister for wishes to pay you on a weekly basis, and the amount paid to you will vary according to the offerings received by the church, but would be a guaranteed minimum amount.

You have no other occupation.

You did work as a tradesman, but found that you did not have the time to minister as well as have another occupation.

If you cease volunteering for the church, any payments to you from the church would cease.

Your expenses as a volunteer minister would include a mobile phone.

You would volunteer whether you were paid or not, as you regard the ministry as your calling.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

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

Reasons for decision

Assessability of income

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, whether in or out of Australia.

Income is generally assessable under section 6-5 of the ITAA 1997.

Under section 6-5 of the ITAA 1997 assessable income is made up of ordinary income and statutory income.

Under subsection 6-5(1) of the ITAA 1997 ordinary income means income 'according to ordinary concepts'. This phrase is not defined under the legislation, but a large body of case law has developed to identify the factors that indicate if an amount is income according to ordinary concepts.

Income according to ordinary concepts

The courts have identified a number of factors that indicate if a payment has the character of income. No one factor is decisive and each fact situation must be examined to determine if the particular payment can be characterised as income according to ordinary concepts.

Periodicity or regularity of payment

Periodicity or regularity of payment is a common characteristic of income receipts, even where the receipts are not directly referrable to employment or services rendered (Federal Commissioner of Taxation v. Blake 84 ATC 4661; 15 ATR 1006; Federal Commissioner of Taxation v. Citibank (1993) 44 FCR 434; 93 ATC 4691; 26 ATR 557).

Personal earnings from performing services are income even if the rewards are received irregularly.

Some items are by their very nature not income according to ordinary concepts. For example, a reimbursement of capital will not be income unless the advance was in the nature of a revenue outgoing incurred in the course of a business. The proceeds of a mere realisation of property are generally not income. A gift is not usually regarded as income. Whereas a tip is income, as it is a product of the services rendered.

Character of the receipt

The character of the receipt in the hands of the recipient must be determined. It is in this context that the character of the payment is determined (Liftronic Pty Ltd v. Federal Commissioner of Taxation 96 (1996) 66 FCR 175; ATC 4425; 32 ATR 557).

Application to your circumstances

We have determined that the payments to you from the church are part of your assessable income. The payment is assessable as ordinary income under section 6 -5 of the ITAA 1997.

Although we acknowledge that the amount paid to you will vary according to the amounts of offerings the church receives, the payments are paid for the provision of your services as a minister of the church. The services you provide are part of your usual income earning activities.

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