Edited version of private advice

Authorisation Number: 1052385539642

Date of advice: 16 April 2025

Ruling

Subject: Assessable income

Question 1

Is the $XXXX Company A received from Company B under the Program to help Australian businesses manage the cost of employing remote job seekers assessable income under section 6-5 or 15-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

Yes

This ruling applies for the following period:

Income tax year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

1.              Company A is an Australian private company.

2.              Company A was registered in January 20XX.

3.              Company A is not registered with the Australian Charities and Not-for-profit Commission (ACNC) and is not income tax exempt.

4.              The Australian Government funds and delivers a range of programs specifically for remote job seekers.

5.              The Program is administered by an Australian Government Agency.

6.              The Program aims to support job seekers, address barriers to employment and contribute to their communities through activities and training.

7.              Under the Program, funding is available for employers to help Australian businesses manage the costs of employing and assisting remote job seekers into the workforce.

8.              Employers can use the funding in any way they choose, including to cover additional training and supervision costs or as a wage subsidy. The incentive is paid once a remote job seeker has been employed full time for XX weeks and is payable through the Program provider.

9.              An employer is eligible to receive a one off payment of up to $XXXX (GST exclusive) for full time employees or up to $XXXX (GST exclusive) for part time employees.

10.          Company B is a Program provider.

11.          Company B and Company A are not related entities.

Relevant legislative provisions

Section 6-5 of the Income Tax Assessment Act 1997

Section 15-10 of the Income Tax Assessment Act 1997

Reasons for decision

Issue 1

Question 1

Summary

The amount received is assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997).

Detailed reasoning

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) provides the Commissioner's view on the taxation treatment of government payments to industry (GPI) under sections 6-5 and 15-10 of the ITAA 1997.

TR 2006/3 applies to payments by the Commonwealth or a State, Territory or local government or government agency.

Section 6-5 of the ITAA 1997 provides:

Your assessable income includes income according to ordinary concepts, which is called ordinary income.

Section 15-10 of the ITAA 1997 provides:

Your assessable income includes a bounty or subsidy that:

(a) you receive in relation to carrying on a ^*business; and

(b) is not assessable as ^*ordinary income under section 6-5.

Paragraph 12 of TR 2006/3 explains 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.

Example 3 of TR 2006/3 is analogous to the circumstances here:

A business is eligible to apply for a government payment to assist with the initial cost to the business of employing an apprentice. A payment to an employer as a financial incentive to take or an apprentice or continue to employ an apprentice is received in the ordinary course of business. As such, it is ordinary income and assessable under section 6-5 of the ITAA 1997.

Application to your circumstances

On the facts here, Company A received the payment from Company B as part of funding within the Program administered by the Agency to assist in employment of remote job seekers. To be eligible for these payments the job seeker must be employed full time for XX weeks. The amount received is income according to ordinary concepts and is assessable under section 6-5 of the ITAA 1997. As the payments are assessable under section 6-5 of the ITAA 1997, section 15-10 of the ITAA 1997 does not require consideration. The payments are assessable income in the income year in which they are received.

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