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This edited version has been archived due to the length of time since original publication.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: 1012590349967

Ruling

Subject: Assessable Income

Question

Is the income you derived from your activities assessable income?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2009

Year ended 30 June 2010

The scheme commenced on

1 July 2008

Relevant facts and circumstances

You carried out activities.

You received payment for these activities.

You state these activities were undertaken as a hobby.

You began conducting the activities after responding to an advertisement and signed a tax file number (TFN) declaration with the other party.

You were required to carry out the activities when rostered.

You would carry out these activities on an ad hoc basis.

You would train others to carry out these activities on half pay rates.

You were not required to provide any equipment or any out of pocket costs in relation to the activities.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5.

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) states that if you are an Australian resident, your assessable income includes all income derived directly or indirectly from all sources whether in or out of Australia during the income year.

Under subsection 6-5(1) of the ITAA an amount is assessable income if it is income according to ordinary concepts (ordinary 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 payment received is income depends upon a close examination of all relevant circumstances; and

    · whether the payment received is income is an objective test.

Relevant factors in determining whether an amount is ordinary income include:

    · whether the payment is the product of any employment, services rendered, or any business;

    · the quality or character of the payment in the hands of the recipient;

    · the form of the receipt, that is, whether it is received as a lump sum or periodically; and

    · the motive of the person making the payment. Motive, however, is rarely decisive as in many cases a mixture of motives may exist.

No one indicator is decisive. The indicators must be considered in combination and as a whole. Whether income is 'ordinary' depends on the large or general impression gained.

You responded to an advertisement seeking applicants. You were required to carry out the activities on a rostered basis and were paid for your services. There were no out of pocket costs associated with the activities. These are all indicators that you were employed by the entity.

In addition to the above indicators you completed and signed a TFN declaration. In doing so there is a strong argument that an employer employee relationship was established at this date.

Therefore the income derived from the activities is ordinary income and assessable under section 6-5 of the ITAA.


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