Edited version of private ruling

Authorisation Number: 1011594206233

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Ruling

Subject: Income - wildlife grant

Is the grant you received assessable income? 

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts and circumstances

The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of, and are to be read with this description. The relevant documents are:

· a private ruling application

· letters from a government department

· a Deed of Grant.

You are registered as a volunteer carer.

Injured and sick animals are referred to you by the volunteer wildlife carer's organisation.

You care for the injured and sick animals at your main residence.

You do not operate a wildlife shelter.

You do not provide services to any government departments.

Your received a grant from a government organisation.

One of the conditions for receiving the grant is that you are a registered carer.

The grant is paid for equipment and other facilities that directly relate to the operation of wildlife shelters and wildlife rehabilitation. More specifically the grant can be used to fund infrastructure (including, but not limited to, cages, enclosures, pens, fencing) and purchasing equipment (for example, heating, cooling) and for attending approved training courses.

The grant can only be used to purchase equipment used primarily for wildlife care and rehabilitation and not for expenses on utilities (for example, electricity, water, gas, sewerage and so on). Items such as food, medicines, medical supplies, vehicles, boats, computers and communication devices, such as mobile phones, will not be considered for funding.

Grant recipients will be required to enter into a legally binding agreement with a government.

The agreement will cover the use of the equipment, monitoring arrangements and the period in which the grant is to be used.

The grant is provided by the government department to recognise your commitment to wildlife rehabilitation.

You do not receive any donations or income for providing care for the injured and sick animals from any entities.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(1).

Income Tax Assessment Act 1997 Section 10-5.

Income Tax Assessment Act 1997 Section 15-10.

Reasons for decision

Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes income according to ordinary concepts, which is called ordinary income.

Relevant factors in determining whether a payment is ordinary income include whether the payment is for services rendered, such as from personal services, and the character of the payment in the hands of the recipient.

Taxation Ruling IT 2639 defines income from personal services as income that a taxpayer earns predominantly as a direct reward for his or her personal efforts by, for example, the provision of services, exercise of skills or the application of labour.

Other characteristics of income that have evolved from case law include receipts that:

· are earned

· are expected

· are relied upon, and

· have an element of periodicity, recurrence or regularity.

The grant payment that you received is not income from personal services. The payment is not earned, as it is a requirement that you are registered carer with a government department, and it was not expected or relied upon as you had to apply for it and you may not have been successful. The payment also has no element of periodicity, recurrence or regularity, in the respect that it is a one off payment.

Therefore, the character of the payment is not ordinary income under subsection 6-5(1) of the ITAA 1997.

Amounts that are not ordinary income, but are included in your assessable income by another provision about assessable income are called statutory income. These amounts are listed in section 10-5 of ITAA 1997.

Division 15 sets out some items that are included in your assessable income as statutory income. Under section 15-10 of the ITAA 1997, 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.

Taxation Ruling TR 2006/3 explains the tax implications of government payments to industry (GPIs) to assist entities (including individuals) to continue, commence or cease business. The payments considered in the ruling are bounties, subsidies, grants and rebates paid or funded by the Commonwealth or a State, Territory or Local government, or government agency.

A 'subsidy' includes a financial grant made by a government. Therefore, the payment may be considered a subsidy within the meaning of section 15-10 of the ITAA 1997. However, it is noted at paragraph 97 of TR 2006/3 that not all government grants and bounties are subsidies. The question as to the nature and quality of any payment must be determined by reference to the agreement or the terms which created in the recipient the right to the government grant.

The grant made by the government department is to provide funding for the cost of equipment and other facilities that directly relate to wildlife rehabilitation. To be eligible for the payment you must be a registered carer. The payment was not made in relation to carrying on a business or providing services to the provider. You received the payment in recognition of your commitment to wildlife rehabilitation.

Therefore, we have determined that the payment is not assessable as a bounty or subsidy under section 15-10 of the ITAA 1997 and the payment is not statutory income.

In summary, the grant is not assessable as ordinary income or statutory income under section 6-5 or section 15-10 of the ITAA 1997 respectively.