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Edited version of your private ruling
Authorisation Number: 1012527719051
Ruling
Subject: Income - PAYG (salary, wages, allowances, lump sums)
Question
Is the grant received by you considered assessable income?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You are employed as an X in a location which is considered rural or remote and you qualified for a grant.
You received $X in the year ended 30 June 2012.
Relevant legislative provisions
Income Tax Assessment Act 1997, Section 6-5.
Income Tax Assessment Act 1997, Section 15-2.
Reasons for decision
Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that 'Your assessable income includes income according to ordinary concepts, which is called ordinary income'. Subsection 6-5(2) of the 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.
An incentive bonus comes within the meaning of ordinary income. An incentive bonus is an additional reward payment derived by you in your capacity as an employee as a financial incentive to remain in your employment (Dean & Anor v. Federal Commissioner of Taxation (1997) 78 FCR 140; (1997) 37 ATR 52; 97 ATC 4762) (Deans Case). Dean's case also found that the payment need not be paid by your employer.
In your case you received payments for undertaking your work activity in a rural or remote area. The payment amounts were based on your remote locality and length of training. The payments are considered a bonus you derive as a result of your income earning activity as they are paid to encourage you to continue working in your remote locality.