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This edited version has been archived due to the length of time since original publication.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

Authorisation Number: 1012715510655

Ruling

Subject: Grants

In order to protect the privacy and commercial in-confidence components of this private binding ruling the following summary is provided.

The taxpayer received a grant.

The Commissioner ruled that:

    • The grant is not assessable as ordinary income in accordance with section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997);

    • The grant is not assessable as statutory income in accordance with section 15-10 of the ITAA 1997;

    • The grant is an assessable recoupment in accordance with Subdivision 20-A of the ITAA 1997;

    • The receipt of the grant triggers CGT event C2 under section 104-25 of the ITAA 1997; and

    • The capital gain or loss made in respect of the grant will be disregarded in accordance with Division 118 of the ITAA 1997.

Does Part IVA apply to this ruling?

Part IVA of the Income Tax Assessment Act 1936 is a general anti-avoidance rule that can apply in certain circumstances if you or another taxpayer obtains a tax benefit in connection with an arrangement and it can be concluded that the arrangement, or any part of it, was entered into or carried out by any person for the dominant purpose of enabling a tax benefit to be obtained. If Part IVA applies the tax benefit can be cancelled, for example, by disallowing a deduction that was otherwise allowable.

We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part.

If you want us to rule on whether Part IVA applies we will first need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply.

For more information on Part IVA, go to our website www.ato.gov.au and enter 'part iva general' in the search box on the top right of the page, then select: 'Part IVA: the general anti-avoidance rule for income tax'.


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