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Edited version of your private ruling
Authorisation Number: 1012361601858
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Subject: Capital gains tax - destruction of rental property - bank interest
Question:
Is the bank interest received ordinary income?
Answer:
Yes.
This ruling applies for the following period:
Year ended 30 June 2012
The scheme commenced on:
1 July 2011
Relevant facts:
You own a property that you use to produce income.
The property was destroyed by fire after 20 September 1985.
The property was insured and you received an amount as compensation for the destruction of the property as well as lost rental income.
You deposited the money into a bank account and received interest.
You rebuilt the property and incurred costs greater than the amount of compensation that you received.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Subsection 6-5(2)
Reasons for decision:
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
Interest income is income according to ordinary concepts and is assessable under section 6-5 of the ITAA 1997.
Whilst we appreciate your circumstances the Commissioner has no discretion to allow you to exclude the bank interest from your assessable income.