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Edited version of private advice
Authorisation Number: 1012622053023
Ruling
Subject: Assessability of discount received
Question
Is the discount of your children's fees you receive assessable income?
Answer
No.
This ruling applies for the following periods
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on
1 July 2013
Relevant facts
Your children are members of a group. Fees are required to be paid for your children to participate in the group.
A fee discount may be given to parents who hold positions on the committee or help out.
You are a professional.
You currently hold the position of treasurer and spend over 100 hours per annum undertaking these activities.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 6-10
Reasons for decision
The assessable income of an Australian resident includes ordinary income and statutory income derived directly or indirectly from all sources, in or out of Australia, during the income year (subsection 6-5(2) and subsection 6-10(2) of the Income Tax Assessment Act 1997 (ITAA 1997)).
Ordinary income is not clearly defined in the legislation and therefore the courts have identified a number of factors that indicate whether an amount has the character of income according to ordinary concepts.
It has been determined that a frequent characteristic of income receipts is an element of periodicity, recurrence or regularity (Federal Commissioner of Taxation v. Dixon (1952) CLR 540; (1952) 10 ATD 82). Other characteristics of income that have evolved from case law also include receipts that:
• are earned
• are expected, and
• are relied upon.
Statutory income is not ordinary income but is included in assessable income by a specific provision in the tax legislation (subsection 6-10(2) of the ITAA 1997).
In your case, the discount you may receive is not considered to be either ordinary or statutory income. Therefore, the discount you may receive is not assessable.