Edited version of your written advice

Authorisation Number: 1012862913346

Date of advice: 19 August 2015

Ruling

Subject: Assessable income

Question

Are the funds you received from the online campaign included in your assessable income?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2015

The scheme commences on

1 July 2014

Relevant facts and circumstances

You are currently studying at university.

You were required to complete a project for a university assessment.

You required funds to complete the project you set up on an online campaign.

The campaign raised $X.

This was the first project you have funded online, however you have completed several similar projects previously.

You have not made any profits from these projects.

The money received is unrelated to your current employment.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

If you earn or receive any money through crowdfunding, some or all of it may be assessable income, depending on the nature of the arrangement, your role in it and your circumstances.

Funds you receive or the profit you make through crowdfunding are likely to be assessable income where you:

• use crowdfunding in the course of your employment

• enter into a transaction or scheme with the intention or purpose of making a profit or gain

• receive money or property in the ordinary course of your business

Ordinary income

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes income according to ordinary concepts.

Ordinary income has generally been held to include 3 categories, namely income from rendering personal services, income from property and income from carrying on a business.

Other characteristics of income that have evolved from case law include receipts that are earned, expected, relied upon and have an element of periodicity, recurrence or regularity.

We do not consider that the money received from the campaign was earned or expected. The amount cannot be said to have an element of periodicity, recurrence or regularity. The money you received is unrelated to your current employment activities. Further we do not consider that you entered into the transaction with the intention or purpose of making a profit.

Carrying on a business

Section 995-1 of the ITAA 1997 defines 'business' as 'including any profession, trade, employment, vocation or calling, but not occupation as an employee'.

Taxation Ruling TR 97/11: 'Income tax: am I carrying on a business of primary production?' summarises the indicators that can be applied to your circumstances to determine whether you are carrying on a business:

• whether the activity has a significant commercial purpose or character

• whether the taxpayer has more than just an intention to engage in business

• whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity

• whether there is regularity and repetition of the activity

• whether the activity is of the same kind and carried on in a similar manner to that of ordinary trade in that line of business

• whether the activity is planned, organised and carried on in a businesslike manner such that it is described as making a profit

• the size, scale and permanency of the activity, and

• whether the activity is better described as a hobby, a form of recreation or sporting activity.

Having regards to your circumstances and the factors outlined above we do not consider you are carrying on a business.

Therefore, the amount you received from the online campaign will not be included in your assessable income.