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Ruling
Subject: Income-cost of living rebate payment
Question:
Is the Cost of Living Rebate Payment (CLRP) that you received from the State in Australian () government considered assessable income?
Answer: No.
This ruling applies for the following period:
Year ended 30 June 2011
The scheme commenced on:
1 July 2010
Relevant facts
You are retired.
You and your spouse received a payment under the CLRP for Seniors scheme from your State Government.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5.
Income Tax Assessment Act 1997 section 6-10.
Income Tax Assessment Act 1997 subsection 6-15(1)
Income Tax Assessment Act 1997 section 10-5.
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 (ordinary income).
The legislation does not provide specific guidance on the meaning of ordinary income. However, a substantial body of case law exists which identifies likely characteristics. Amounts that are periodical, regular or recurrent and relied upon by the recipient for their regular expenditure are likely to be ordinary income, as are amounts that are the product of any employment of, or services rendered by, the recipient (Federal Commissioner of Taxation v. Rowe (1995) 60 FCR 99; 95 ATC 4691; (1995) 31 ATR 392).
You are retired and you do not provide services to the State Government in order to receive the CLRP. While you will receive the one payment from the State Government, the payment is not expected or relied upon.
Therefore, the character of the CLRP 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.
In your case, there is no other provision listed under section 10-5 of the ITAA 1997 which applies to the CLRP you received and the CLRP is therefore not considered to be statutory income.
Subsection 6-15(1) of the ITAA 1997 provides that if an amount is not ordinary income and is not statutory income, it is not assessable income. Therefore, the CLRP is not assessable income and is not required to be included in your tax return.