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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1051270732178

Date of advice: 21 August 2017

Ruling

Subject: Assessable Income - industry assistance payments

Question

Are the industry assistance payments you have received, assessable income?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2017

The scheme commences on

1 July 2016

Relevant facts and circumstances

As an eligible licence owner you have received a one-off transitional assistance payment as well as a hardship payment.

Your licence has not been cancelled as a result of receiving these payments.

Relevant legislative provisions

Income Tax Assessment Act 1997, subsection 6-5(1)

Reasons for decision

As a result of industry transport reforms the State Government developed an industry assistance package for those affected by the reforms. The package included the payment of one-off transitional assistance payments to help transition the new regulatory arrangements together with payments from a hardship fund that applied to eligible licence holders meeting certain criteria including a means-test.

Under the reforms you have applied for and received both payments.

Subsection 6-5(1) of the Income Tax Assessment Act 1997 provides that assessable income includes income according to ordinary concepts (ordinary income). The characteristics of ordinary income have been developed by case law and generally fall into three categories:

Taxation Ruling TR 2006/3 Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business, provides guidance to determine the taxation consequences of receiving payments in the circumstances that you have described.

In summary, the Ruling explains that where a government payment is made to an industry to assist businesses within that industry to continue operating or to compensate for loss of income, the payment is assessable income of the recipient.

The Ruling also explains that a government payment will only be taken to be capital in nature where the payment requires licence holders to give up or sell their licence or otherwise bring their business or income-earning activity to an end. Importantly, these outcomes are not a requirement of the reform payments that have been made by the State Government.

For these reasons the payments are assessable as ordinary income in the year in which it is derived.

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