| Disclaimer This edited version has been archived due to the length of time since original publication.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 private advice
Authorisation Number: 1051660949432
Date of advice: 8 May 2020
Ruling
Subject: Assessable income - Government Grant
Question 1
Is the funding you received under the Government Grants program included in your assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
This ruling applies for the following periods
Financial year ended 30 June 20XX
Financial year ending 30 June 20XX
Financial year ending 30 June 20XX
Financial year ending 30 June 20XX
The scheme commenced on
1 July 20XX
Relevant facts and circumstances
You carry on a business.
You were awarded a Grant in the 20XX-XX financial year.
The Grant was paid to you in the 20XX-XX in a lump sum payment.
Under condition X of this Grant if any of the money granted to you under this agreement is not required you are required to pay this money back to the Commonwealth.
As part of this Grant you are required to undertake various activities over the duration of the agreement, and the funding is to facilitate the activities detailed in your Grant application and Project Budget.
The Project Budget shows that there are numerous different activities that the Grant has been paid to fund over the 20XX-XX, 20XX-XX and 20XX-XX financial years.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Reasons for decision
Your assessable income includes income according to ordinary concepts, which is called ordinary income (section 6-5 of the ITAA 1997).
Ordinary income has generally been held to include 3 categories, namely, income from rendering personal services, income from property and income from carrying on a business.
Taxation Ruling TR 2006/3 Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business (TR 2006/3) contains the Commissioner's opinion on how the income provisions apply to various grants paid or funded by the Commonwealth Government.
A Government payment to assist with business operating costs or liabilities is ordinary income in the hands of the recipient and is assessable under section 6-5 in the income year in which it is derived (paragraph 12 of TR 2006/3).
The Grant you have received for your project is intended to provide funding for the specified activities you are required to perform as outlined in the Agreement and Project Budget. The Grant has been received in the course of carrying on your business and is included in your assessable income under section 6-5 of the ITAA 1997 when it is derived.
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).
