Edited version of your private ruling

Authorisation Number: 1012479996873

Ruling

Subject: Assessability of income received for taking statistics for a sport

Question and answer:

Should the payments you receive from the overseas company be included in your assessable income?

No.

This ruling applies for the following period:

Year ending 30 June 2013

The scheme commenced on:

1 July 2012

Relevant facts and circumstances

An overseas company provides live sports data to third parties. They do not have offices in Australia, however they have one person organising games and payments in Australia.

You take the statistics of the matches for the overseas company.

You participate in the sport and you will often go and watch other teams play, regardless of whether you are taking statistics or not. You do this for enjoyment and your love of the game.

The games for which statistics are required to be kept are organised during the week with the company's Australian representative.

You have no contact with the overseas company; you only contact the Australian representative.

You have not signed any documents or contracts with the overseas company.

There is no expectation of regular attendance at games to take the statistics; if you are available you will. If you are not available there are no negative consequences.

You receive payment based on how accurate your information is.

You are paid at the end of each month through a third party account which exchanges the money to Australian dollars. You log in and transfer the money to your personal bank account.

You receive money for any travel or the cost of entry to games that you may have to pay.

The income you earn from this activity is not for regular expenditure and is not paid to provide financial support or relied upon for that purpose.

The activity is neither your principal income earning activity nor does it constitute a business activity.

You expect on average you will complete slightly less games per week than you have to date until the end of the current season due to personal commitments preventing you from attending the games.

Relevant legislative provisions

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 10-5

Income Tax Assessment Act 1997 Section 15-2

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

Reasons for decision

Summary

The payments you receive are not required to be included in your assessable income as your activities constitute a pastime or hobby.

Detailed reasoning

Ordinary income
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) advises that as an Australian resident, your assessable income includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the financial year.

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. Generally, ordinary income is considered to include:

· amounts received in return for personal services, whether received in the capacity of an employee or otherwise; and

· amounts received periodically or regularly and which you rely on for the maintenance of yourself and/or your dependants (Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540).

Ultimately, whether or not a particular receipt is ordinary income depends on its character in the hands of the recipient. The whole of the circumstances must be considered and the motive of the payer may be relevant to this consideration.

Where your activities constitute a pastime or hobby rather than an income producing activity, money and other benefits received from the pursuit of that pastime or hobby will not be included in your assessable income as ordinary income, even if the receipts are regular or periodical.

A pastime or hobby can be described as a social or personal pursuit of a non-commercial nature. Amounts received from engaging in a pastime or hobby are generally not intended to, and often do not, cover expenses.

You attend matches when you are available and record statistics for an overseas company.

The income you earn from this activity is not for regular expenditure and is not paid to provide financial support or relied upon for that purpose. The activity is neither your principal income earning activity nor does it constitute a business activity.

As such, it is accepted that the amount you receive is of a non-commercial nature and the activities are a social or personal pursuit which constitutes a pastime or hobby.

Consequently, you are not required to include the payments you receive from the overseas company in your assessable income under section 6-5(2) of the ITAA 1997.

Statutory income
Section 6-10 of the ITAA 1997 explains that your assessable income also includes statutory income from all sources in or out of Australia. Typical examples of statutory income include capital gains from selling of property other than your own residence, royalties and eligible termination payments.

A list of the statutory income provisions can be found in section 10-5 of the ITAA 1997. The most relevant provision to consider for your statistic recording activity is the potential operation of section 15-2 of the ITAA 1997.

Subsection 15-2(1) of the ITAA 1997 states that:

Your assessable income includes 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 of or services rendered by you...

Amounts that are a reward or remuneration for services rendered, or a product, incident or consequence of employment, come within the scope of subsection 15-2(1) of the ITAA 1997.

In your case, you are not an employee of the overseas company. The payments are considered to be incidental to a pastime or hobby and not a product or incident of any employment or a reward for services rendered. As such, the payments are not assessable under section 15-2 of the ITAA 1997.

Therefore, the income you receive from the overseas company for your statistic recording is not considered assessable income, and you are not required to include these amounts in your income tax return.