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: 1051737610759

Date of advice: 11 August 2020


Subject: International income


Is a Covid19 payment paid by the government of Country A assessable income in Australia under sections 6-5 or 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?



This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a dual Australian and Country A citizen.

You reside solely in Australia and are an Australian tax resident. You pay Australian tax based on your Australian income.

You receive no income from Country A including employment or investment income. Despite this, you are required to lodge annual taxation returns in Country A.

You received a COVID-19 support payment in early 20XX. This payment is not taxable in Country A.

Relevant legislative provisions:

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

Reasons for decision

Assessable income - general

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, whether in or out of Australia, during the income year.

Subsection 6-5(1) refers to 'ordinary income' as 'income according to ordinary concepts' but does not otherwise define the term. The phrase 'income according to ordinary concepts' appears to have been inspired by Jordan CJ's statement in Scott v. FCT (NSW) (1935) 35 SR (NSW) 215 at 219:

The word "income" is not a term of art, and what forms of receipts are comprehended within it, and what principles are to be applied to ascertain how much of those receipts ought to be treated as income, must be determined in accordance with the ordinary concepts and usages of mankind, except in so far as the statute states or indicates an intention that receipts which are not income in ordinary parlance are to be treated as income, or that special rules are to be applied for arriving at the taxable amount of such receipts.

Subsection 6-10(2) of the ITAA 1997 also provides that your assessable income includes amounts assessed by a specific provision of either the ITAA 1997 or the Income Tax Assessment Act 1936 (ITAA 1936) (the Act).

Covid19 Payment

This "payment" is a tax credit as defined by the taxation authority of Country A.

In simplified terms, the payment works as follows:

1)    If eligible, the taxpayer is given a credit for the Payment in their 20XX income tax account.

2)    This credit is refunded to the taxpayer, resulting in the Payment being made.

3)    When the taxpayer's 20XX income year income tax assessment is done it will show a credit for the Payment in the account which is offset against a debit for the making of the payment of the amount (offsetting each other).

4)    The taxpayer's income tax is assessed in the normal manner (the only difference being that it contains the entries in (3).

A tax credit of this type, in the Australian tax system, would be a refundable tax offset.

An income tax offset, whether it originates in Australia or under a foreign taxation law, does not come within what is ordinarily understood to be income according to ordinary concepts. Therefore, the Payment is not income according to ordinary concepts.

The Payment is also not statutory income as it is not something that would be assessed as income under another provision of either the ITAA 1997 or the Income Tax Assessment Act 1936 (ITAA 1936).

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).