Edited version of private ruling

Authorisation Number: 1011873020726

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Ruling

Subject: Assessable income - air ticket provided and cash payment

Question 1:

Do you need to include an amount in your assessable income when someone purchases an air ticket for you to travel for a religious assignment?

Answer:

Yes.

Question 2:

Do you need to include an amount in your assessable income when you are given a cash payment from the religious organisation for you to travel for a religious assignment?

Answer:

Yes.

This ruling applies for the following period:

1 July 2010 to 30 June 2011.

The scheme commences on:

1 July 2010.

Relevant facts and circumstances

You have full-time unrelated employment.

You travelled to interstate for a religious assignment during the 2010-11 financial year.

Another person purchased your return air ticket.

You stayed in accommodation provided by the religious organisation. You spoke at functions. You were given an envelope that contained some cash at one of the functions. You paid for incidental expenses during your stay.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 21

Income Tax Assessment Act 1997 Section 6-5

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

Income Tax Assessment Act 1997 Section 6-10

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Subsection 15-2(1)

Income Tax Assessment Act 1997 Subsection 15-2(2)

Reasons for decision

Income

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) states that if you are an Australian resident, your assessable income includes the ordinary income you derive directly or indirectly from all sources, whether in Australia or overseas in the income year.

Ordinary income is income according to ordinary concepts (subsection 6-5(1) of the ITAA 1997).

Section 6-10 of the ITAA 1997 provides that amounts that are not ordinary income may be included in assessable income under another provision as statutory income.

Subsection 15-2(1) of the ITAA 1997 provides that the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, or for, or in relation directly or indirectly to, any employment or services rendered by you will be included in your assessable income. This is so whether the things were provided in money or in any other form (subsection 15-2(2) of the ITAA 1997).

Section 21 of the Income Tax Assessment Act 1936 also provides that where a transaction or payment is paid or given in a form other than cash, you are deemed to have received the money value of that item.

A Taxation Ruling provides guidelines for determining whether gifts received by religious workers are assessable income. The ruling is mainly concerned with whether gifts received by religious workers are income according to ordinary concepts, but also discusses whether the gifts are assessable income under subsection 15-2(1) of the ITAA 1997.

The ruling states that if a religious worker receives a gift because of, in respect of, for, or in relation to any income producing activity of the religious worker, the gift is assessable income, even if:

· the donor is not legally obliged to make the gift

· the gift is made by a family member, fellow worker or friend

· the gift is received in kind rather than in money; or

· the religious worker is not in any way motivated by the prospect of receiving the gift but is motivated only by a genuine commitment to religious beliefs.

On the other hand, a personal gift received by a religious worker for personal reasons, not related to any income producing activity on the part of the religious worker, is not assessable income.

In your case, you travelled interstate to attend religious functions. The purpose of the trip was for a religious assignment. Your air ticket was purchased by another person and you received an envelope with cash in it.

The Commissioner considers that the air ticket and cash payment you received were for your attendance and speaking at the religious functions and are in a relevant sense a product or incident of the service you performed on these occasions. Accordingly, the value of the air ticket and the payment in cash are to be included in your assessable income.

Additional information

Section 8-1 of the ITAA 1997 allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income. However, you cannot deduct a loss or outgoing to the extent that it is a loss or outgoing of a capital, private or domestic nature.

It has been determined that the value of the air ticket and the cash payment that you received as a result of you attending and speaking at religious functions are assessable income. Therefore, expenses incurred in earning this assessable income are deductible.

You are able to claim a deduction for any incidentals that you may have incurred whilst away from home. This may include meals or fares to and from the airport. However, you must keep receipts for items that you wish to claim as a deduction.

Note: As you did not incur any expense for the air ticket you are not able to claim a deduction for the cost of the air ticket.