Edited version of private advice

Authorisation Number: 1052339418932

Date of advice: 4 December 2024

Ruling

Subject: Assessable income

Question 1

Is the grant you received considered assessable income?

Answer 1

Yes.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

Administrator A has committed over XX years to provide financial incentives for doctors to become GPs in State A.

You are registered with the Australian Health Practitioner Regulation Agency (Ahpra).

In early 20XX, you enrolled to undertake the General Practitioner (GP) grant program offered by administrator A by applying to organisation A.

In XXXX 20XX, you were accepted into the Program A in State A after satisfying all requirements.

In XXXX 20XX, you applied for the grant.

The grant is provided to doctors in training who are doing further training to gain qualification as a fully qualified (fellowed) general practitioner.

In XXXX 20XX, you were accepted into the grant. As a successful applicant for the grant, administrator A agreed to make three instalment payments to you, only if the following conditions are met at the time of the instalment payment:

•                     secured, commenced and undertaking a training program/term

•                     remain enrolled in a GP program in State A

•                     maintain a valid working visa, and

•                     maintain current professional Ahpra registration.

In XXXX 20XX, at the start of your training commencement, you received your first instalment payment of $XX.

In XXXX 20XX, you will receive your second instalment of $XX, subject to you remaining enrolled in the program for XX months.

In XXXX 20XX, you will receive your third and final instalment of $XX, subject to you remaining enrolled in the program for XX months.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

Income Tax Assessment Act 1997 section 6-15

Income Tax Assessment Act 1997 section 6-20

Income Tax Assessment Act 1997 section 10-5

Income Tax Assessment Act 1997 section 11-15

Income Tax Assessment Act 1997 section 15-10

Income Tax Assessment Act 1997 section 51-10

Reasons for decision

Unless otherwise specified the sections referred to in this reasoning are from the Income Tax Assessment Act 1997 (ITAA 1997).

Taxation Ruling TR 2006/3 Income Tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business provides the Commissioner's view on the taxation treatment of government payments to industry including consideration of section 6-5. TR 2006/3 applies to schemes which involve bounties, subsidies, grants and rebates paid or funded by the Commonwealth or a State, Territory or local government, or government agency.

Under paragraph 4 of TR 2006/3, it states that bounties, subsidies, grants and rebates fall into the three broad categories: Government payments to continue business; Government payments to commence business; and Government payments to cease business.

Paragraph 4 goes on to list examples of what these government payments include. Included under government payments to continue business, are payments to:

•                     provide income support; and

•                     encourage business expansion.

Paragraph 10 to 12 of TR 2006/3, discusses what is included as assessable income for the taxpayer under section 6-5, where GPI means government payment to industry, states:

10. A GPI to assist a business to continue operating, except where the payment is for agreeing to give up or sell part of the profit yielding structure, is included as assessable income of the recipient under section 6-5 or section 15-10.

Section 6-5

11. A GPI to provide income support because of an actual or expected reduction in business income is ordinary income in the hands of the recipient and assessable under section 6-5 in the income year in which it is derived.

12. A GPI 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.

Under subsection 6-5(1), your assessable income includes income according to ordinary concepts, which is called ordinary income. Income according to ordinary concepts is not defined in the ITAA 1997. However, there is a substantial body of case law from which a number of factors have been drawn which indicate whether an amount has the character of income according to ordinary concepts (ordinary income).

A frequent characteristic of income receipts is an element of periodicity, recurrence or regularity, even if the receipts are not directly attributable to services rendered.

Application to your circumstances

Administrator A has committed over XX years to provide financial incentives for doctors to become GPs in State A.

The GP grant program aims to:

•                     increase the number of GP trainee enrolments in 20XX and 20XX

•                     provide a top-up payment for first year trainees, and

•                     provide a payment to support the costs of exams undertaken during GP training.

To be eligible for the grant program you are required to have and maintain your registration with Ahpra as a doctor. Without this registration you would no longer be eligible for the grant. The amounts received under the grant are income according to ordinary concepts as it has the characteristics of ordinary income and therefore are assessable under section 6-5. According to subsection 15-10(b), due to the grant being considered assessable income under section 6-5, it is not included in your statutory income under section 6-10. The amounts are not considered exempt income. The amounts are assessable income in the income year, in which you received the instalment.

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