• Legal database
Legal database
Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012513906619

Ruling

Subject: Income - assessable - honorarium

Question

Is the payment you receive assessable?

Answer

No

This ruling applies for the following periods:

Year ending 30 June 2014

Year ending 30 June 2015

The scheme commences on:

1 July 2013

Relevant facts and circumstances

You are a member of a group.

The term of the member appointment is up to three years.

You perform duties as a member of the group.

You receive $X per month from the group as an 'honorarium'.

The purpose of the payment is to cover any expenses incurred by the members in undertaking their duties in that capacity.

You have no formal contract or agreement with the group in relation to the member position held.

Reasons for decision

An honorarium is a payment or gesture made on personal grounds that is either tangible or intangible and can be referred to as an ex gratia payment, bona fide (or true) honorarium or gift.

True honorariums are not included in assessable income.

In determining whether an amount is ordinary income, the courts have established the following principles:

    · What receipts ought to be treated as income must be determined in accordance with the ordinary concepts and usages of mankind, except in so far as a statute dictates otherwise

    · Whether the payments received is income depends on a close examination of all relevant circumstances, and

    · Whether the payment received is considered income is an objective test.

The following factors indicate a 'true honorarium'.

      · The payment is received for personal reasons

      · The payment has no connection to the recipient's income earning activities or services rendered

      · The payment is not received as remuneration or a consequence of employment

      · The payment is not relied upon or expected by the recipient for day-to-day living

      · The payment is not legally required or expected

      · There is no obligation on the part of the payer to make the payment, and

      · The payment is a token amount compared to the services provided or expenses incurred by the recipient.

In your case, the payment is made to cover expenses incurred in performing the tasks required as a member of the group.

The payment made would be considered a token amount compared to the services you provide and the expenses you incur. The payment is not legally required to be made by the group and although it is paid on a regular basis it would not be considered to be relied upon or expected for day-to-day living.

The payment you receive from the group would be considered an honorarium and therefore would not be assessable income.


Back to top